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What a quarantine tells you about your budget

Well, this certainly has been a strange month for all of us. And while I have tried to make both my work life and personal life normal (adding ‘home-school educator’ to my job title) the feeling of ‘different’ is unavoidable. I haven’t lost my sense of what day it is, or what month it is. Although the days now all feel the same. It is similar to the feeling of abnormality between Christmas and New Year’s.

At our house, we are enforcing the normal school/work routine. Everyone is getting up early, doing our morning rituals and dressing appropriately for work and/or school. My answer to the running social media joke is that I am not wearing a dress shirt with sweatpants during zoom meetings. But, like every other family, we march forward by staying home for the greater good. For the high risk populace and for essential workers.

The term essential is the subject of this month’s ‘for your consideration’. Not the brave workers who are doing their best to tend to our life and health needs, but the term as it relates to life and finances. As we cope with this situation and are forced to reassess our most basic needs, these times reveal what is truly essential.

One of the most interesting things I have noticed about life in quarantine is how it affects budgets. Obviously, there are the affects on employment and incomes; either through job loss, furloughs or decreases in working hours. But the focus for this piece is on the expense side of budgets.

One of the things I noticed with my own budget is the decrease in the number of actual spending items over the last six weeks. During a normal month there may be 15-20 items documented on our non-reoccurring spending list. In the last month we have had less than ten. And half of the items were ‘groceries’.

The quarantine has forced us to recognize what items we truly need to maintain a comfortable way of life. Those other ‘fun items’, while they will be missed, are not as important right now. Using the items I include on a financial planning worksheet, and based on conversations I have had with clients over the last month, here are the winners and losers of budgeting during a quarantine.

The 'essentials':

The internet: A story of an unexpected hero. A rising star among our expense spread sheets. For years, I have placed this item in the ‘discretionary’ section of the budget worksheet. Once considered a luxury item, used for entertainment during our downtime, it has become essential to getting work and life done while we all shelter in place. And at its current low price, the internet may be the greatest dollar value in everyone’s budget. I will be promoting this item to ‘committed expense’ status permanently.

Groceries: While restaurants are still allowing take out (and we try to support our local eateries) there is no doubt that money allotted for groceries has skyrocketed. The silver lining is that this has provided a way to fill our time, bond with our families and learn new cooking skills. This item was a no brainier ‘committed expense’ before the pandemic. It is even more important now. Albeit, this and the internet may turn us into shop-at-homeaholics if this quarantine continues on too long.

Subscription streaming services: Can we survive without Tiger King? Maybe, but do we really want to risk it? While I don’t think this item will remain an ‘essential expense’ after the quarantine is over, I do think this item falls under a subcategory for mental health. More than ever we need to fight boredom and depression by finding outlets to entertain us and divert our attention away from current events. There are only so many puzzles we can finish or walks we can take. Cable television, and its younger sibling streaming services, is providing an important respite from reality.

Hobbies: Like the previous category, hobbies isn’t likely to remain an ‘essential expense’ and will be returned to a discretionary expense when we are back to normal life. But a good book or crafting supplies is going to give our spirits a very necessary lift.

The ‘non-essentials’:

Gasoline: The recent collapse of oil futures aside, it is very obvious that the demand for gasoline has decreased drastically. Where can we go when there is nowhere to go? We are finding out that everything we need to sustains us is within a few hundred meters of where we all now sit.

Dining Out/Entertainment: Yes, there is some ‘take out’ still occurring, but it is not as frequent. Moreover, take out does not include the dining experiences which comes with ordering extra food and drinks while enjoying the ambiance. Even if we are enjoying the same frequency of restaurant visits the expenses are certainly lower.

Vacations: It has only been six weeks, but the uncertainty of the future is causing many to cancel existing vacation plans, and delay future planning. In addition, our current situation has eliminated the unexpected ‘day trips’ that add a few hundred dollars to our expenses when boredom forces us out of the house for a day of adventure.

Hair/Personal Care: Everything is closed….we may not look good, but we’re saving money!

If there is a lesson to learn about our spending habits during a quarantine, it’s that necessity and essential are words with fluid definitions. Wants and needs are sometimes interchangeable, depending on the environment around us. In order to have disciplined spending habits we must understand the ‘why’ of our expenses, and how our life would be different (for better or worse) if certain items were included or excluded.

For some of us, our budgets are constrained by unfortunate limited income streams. For others, what we thought were important expenses have suddenly become completely unnecessary. Now is a very unique time to identify what our true needs will be during normal times and abnormal times. The exercise should train us to understand that financial plans are not set in stone and are forced to change when necessary. When creating a personal or business budget, we must ask the question, ‘is this really necessary’? The answer is situational and is never universal or permanent.

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