Some businesses have closed their doors, others have employees working from home. Whether you’re a business owner or an employee, finances are dominating your thoughts.
We understand your concerns, will you still have a steady income as Covid-19 continues to unfold over the next weeks and months? How will you cover your bills? How will you maintain your lifestyle?
Unfortunately, the stark reality is that many of us will not continue to maintain our pre-Covid-19 lifestyles. But this doesn’t mean you’ll end up bankrupt either.
What you can learn from Frugal living extremists
Over the past decade a movement has been quietly growing in different countries around the world.
For some followers of ‘financial independence, retire early’ (FIRE) the aim is to retire in their 40s or even 30s. For others, the goal is financial independence, which requires building a nest egg that gives you the ability to make decisions that are focused on your life and family, instead of your income.
If you’re thinking that becoming a FIRE acolyte in the middle of a global pandemic and possibly even a recession is completely out of the realm of possibility, particularly when you’re concerned you won’t be able to cover your bond next month, you’re probably right.
There’s a lot to learn from the way FIRE supporters live and the financial decisions they make, though. The goal is to save half of what you earn each month. Achieving FIRE is a big deal – it takes a huge amount of focus and determination.
But imagine if you only needed half of what you currently spend to cover your expenses? Suddenly, the terrors of financial ruin are far more distant, and coming through Covid-19 without bad debt is a real possibility.
Frugal living tips to help you through Covid-19
Focus on your spending rate and not your income
Embrace a mindset shift that doesn’t spend based on what you earn, but only on what you need.
Reevaluate your living needs
Downsize your living (particularly for renters)
Generate money from your property by renting out rooms or cottages
Move in with family if necessary.
Pay close attention to what you spend on food
Restaurants may be closed for the time being, curbing entertainment expenses, but even convenience foods cost more than home-cooked meals.
Remember when you were a student? Avoid luxury items, create a ‘food’ budget and stick to it each month.
Take care of yourself
Doctors’ bills can be expensive
Focus on what you can control, such as how much you exercise and your nutrition.
Avoid the dentist by paying particular attention to your teeth – particularly with your kids.
Reduce your fuel costs
Once lockdown is over, consider ride sharing
If your household has two cars, prioritise the most fuel-efficient vehicle
Plan your trips better to save fuel and mileage.
Reduce utility costs
Pay close attention to your utility bills (link to article 2)
Curb unnecessary spending
Treat saving as an expense
Give yourself an allowance for discretionary spending, instead of spending whatever is left over after you’ve paid expenses (and put money away as savings)
Buy second hand if you can (eg appliances, vehicles and furniture).
Making saving a priority, not an after-thought
Auto deposit into a savings account each month
Save until you can afford to make a purchase. Avoid buying on credit.