If you’ve ever created a budget, you’re right to have felt accomplished afterwards. But budgets aren’t static; they are meant to evolve with our life events — for instance, having a baby, getting a new job, or moving to a different city. “If you’re not into doing a monthly money check-in, at least examine your strategy twice a year to make sure it’s still the most effective option for you,” Erin Lowry, a personal finance expert and author of Broke Millennial, tells Thrive. A global pandemic, it turns out, can speed up the need to revisit your budget.
To some — especially those who became unemployed or had their hours reduced amidst the coronavirus crisis — this hardly comes as news. But the truth is, the pandemic has ushered in an opportunity for the majority of Americans — even those who have been lucky enough to hold onto their jobs — to examine their finances and evaluate their expenses. Case in point: In a Thrive Global and Discover survey of 1,000 Americans, a whopping 90% of individuals said they’re paying more attention to their spending habits as a result of COVID-19.
Even those who typically don’t track their spending closely are realizing the value of understanding where their money goes. “I’ve always had a decent handle on my money, but I haven’t always paid close attention to where exactly I spend it,” admits Alexandra Hayes, Senior Content Development Editor at Thrive Global, in the video below. “Now that we’re living in this world altered by the coronavirus, I really want to be more proactive and in control of where and how I spend my money,” she says.
Watch this video in full to learn how Hayes became a believer in budgeting:
Budgeting doesn’t need to be restrictive
Unfortunately, the word budget is “often reviled because it sounds restrictive and painful,” says Lowry. “But really, a budget isn’t about making you resentful of your financial situation. It’s about putting yourself in control just by knowing how much money is going in and how much is going out each month. You can’t make actionable, helpful decisions without that information.”
Whatever you decide to call it, having a budget can actually open up new freedoms in your finances. Without a budget, you might think you’re spending freely but may often be left wondering, “What the heck did I spend my paycheck on?” Budgeting allows you to control your money instead of letting it control you.
If you haven’t been monitoring your finances since the coronavirus crisis hit, accounting for how much money you currently have coming in and what you’ve been shelling out is essential. If you have a Discover card, using Discover’s Spend Analyzer tool to track your spending is an easy way to go about this. It shows you exactly how you’ve spent money on your card, which is the first step to achieving your financial goals. It allows you to view your card activity within a given time frame, and shows you a chart of how you’re spending by category, such as grocery stores or gas stations.
Once you have a clear picture, you can ask yourself if your spending choices align with your goals and values. You might realize, for instance, that what you’re spending on clothing is preventing you from having cash to put toward savings — especially during a time when that added financial buffer would help you feel more secure. Or you might notice that some of your go-to purchases that stopped abruptly once you started sheltering in place — Uber rides, a daily $5 iced matcha, weekly blowouts, etc. — weren’t all that “essential” after all. In fact, 84% of respondents in the Thrive Global and Discover survey said they will be curbing their “convenience spending” even after the coronavirus pandemic has settled.
Giving to get: The perks of generosity
Cutting back on non-essentials can open the door for new opportunities to put your dollars where they’ll make a more meaningful impact on your life. For Hayes, that meant making room in her budget for charitable giving. “I see that I have room to rethink where my money goes, and that I can and should donate more to first responders and social justice organizations, like those that support the Black Lives Matter movement,” she says.
And while you might not immediately think of spending on others as an investment in yourself, research shows that giving has benefits for both the receiver and the giver. Knowing that we’re making an impact has been found to have a positive impact on our physical health as well as our mental well-being.
For Discover cardmembers, finding a bit of extra cash to donate to a good cause is a built-in perk. When you use your Discover It card, you get 5% cash back at different places each quarter up to the quarterly maximum when you activate, that’s up to $75 cash back. You’re also earning 1% cash back on all your other purchases, automatically. Then, you can donate that cash directly to one of Discover’s charitable partners (or use it to pay down your balance).
Another simple way to make sure you’re spending money on things that line up with your values is to pause between your impulse to buy and actually making a purchase. Research published in the Journal of the Academy of Marketing Science found that instituting a delay — such as leaving an item in your online cart for 24 hours — can significantly reduce the urge for spontaneous purchases.
Reevaluating your budget to reduce your financial stress starts with being more mindful about where you want your money to go. It’s a strategy that’s been working well for Hayes: “I’ve made conscious decisions to spend on things I truly value right now,” she says, “and I know I’ll bring this mindfulness with me to the future, whatever that may look like.”