I have been putting this off for months. Read any survival guide, how-to post or any form of advice given to a new single mom and one of the first things you are urged to do is create a budget. I know this. I preach this. And yet, when it came to my own life, I just couldn’t get myself to do it.
At first, I didn’t want to because that would mean that I was facing the fact that my marriage was over. Also, financially I was doing ok. My business was going swimmingly, I had a nice emergency fund saved up and my future looked good. Then, COVID-19 struck, and in a matter of weeks my emergency fund was reduced to an emergency itself, and I had no guarantee of any income in the near future.
This change in circumstances made me scared to even think of tackling a budget. How do you work out how much money you need when you have limited or no means of actually making that money? My income was close to non-existent, but my expenses were very real.
After 10 weeks, I scraped together enough guts to work out my budget. Not a pretty picture, I can assure you. But after doing it, I feel a bit more focussed. I know I have a huge shortfall, but that also means I can focus on the things that will (hopefully) bring in the most money.
By structuring my finances, I could identify the things that are leaching money, and where I mindlessly spend. By writing down my sources of income I could identify which streams bring in less than what they are costing me, even just timewise, and which ones would benefit if I focussed on them more. I got a clear picture of where I could scale and were I should scale back.
So how did I do it? Keep in mind, I have very little income, and not even a whisper of a promise for any steady income to come. What I do have, is definite expenses, so I started there.
- I worked out my bare-bones budget.
This is the amount of money that I need in order to keep myself and the kids alive, fed, clothed, with a roof over our heads. This includes no luxuries, no nice-to-haves, not even things like Netflix (entertainment, at this stage, is a nice to have). Some of the expenses are variable, so I did my best to estimate based on the previous 3 months’ amounts. My running expenses for my bare-bones budget are:
- Water and electricity
- Insurance (which I have cut to the bone)
- Petrol money
- Internet and hosting
Their dad covers our medical aid and my cell phone, so those two recurring and essential expenses are not for my pocket. Luckily.
- Added some meat.
These are things that I spend money on every month that are not really a question of life or death but are necessary none the less. Things like the kids’ vitamins and supplements, loan repayments, clothing account payments, and any clothing expenses we might have. I also try to have some money left somewhere for in case there is a medical emergency – our medical aid does not cover medicine, nor visits to the emergency room.
- Worked out how much I needed to supplement my current income with.
By adding the above two sections’ totals together, I got a round figure of what I needed every month. I then wrote down all of my income streams, and the bare minimum I can expect from them for the coming month. By subtracting my expenses from my income, I got a nice number of what I needed to supplement my current income with in order to stay afloat. Yeah, I felt really good about myself at this stage…
- Took a long hard look at my bare-bones budget, and at the meat.
With the shock of what I needed to break even very fresh in my mind I could critically look at my expenses and rather objectively decide what should or could be cut. Our food expenses had to be halved, as far as possible. No more just driving – petrol money had to be halved. Electricity needs to be saved in any way possible (nice, with winter only starting now!). No more take-outs (luckily not a big thing in any way, or unluckily, since now it will not make that big a difference in my bottom line). This trimmed about R3000 from my bottom line, and at this stage that makes a huge difference!
- Made arrangements for payment-holidays where I could.
After knowing what I needed and what I have to work with, I contacted my bank, our landlord, and a few other people to ask for payment holidays. Most were accommodating – I got a nice cut in our rent, but only for 3 months – but not all. Still, the ones who agreed to a break in payments are contributing to my potential success of making it through this crisis.
- Stopped panicking.
The situation is dire, I know. My emergency fund can carry us for a month, maybe two if I stretch it. My income is trickling in while I need a running stream. But I also realised that panicking is not going to make any of this better. It is not going to give me money in the bank, or a reduction in debt. it is only going to make me negative, anxious, and in the end depressed. So for now I am focussing on what I can control, and for the rest – let go and let God.
The crisis is long from over, and I have no idea how we are going to survive the coming months. What has changed is the fact that I have a number that I need to reach. When I get there, I know we are safe for another month. I can set smaller financial goals, smaller steppingstones, to get ahead. And when this is all over, I can build from there. Working out my budget has given me a life raft.