Ways to plan your budget before COVID-19

The COVID-19 outbreak may make you rethink how you manage your expenses and income. Create and stick to a budget it's essential, but there's more than one approach you can take.

Zero-based budgeting is an option if you want to be able to account for every dollar that goes in and out each month. The idea behind this budgeting method is to give every dollar a job. A budget Zero-based can help you avoid wasting money when your finances are turned upside down.

What is a zero-based budget?
A budget Zero-based means that you allocate every penny you receive each month to a specific purpose. Once you've figured out what you need to allocate to cover spending, saving, and paying off debt, you should have zero money left over for the month.

How does zero-based budgeting work?
Zero-based budgeting may seem complicated, but it's actually simple. Every month, you sit down to make a new budget based on income and expenses for that month, allocating each dollar of your budget to a category or subcategory.

One way to avoid overspending with zero-based budgeting is to use cash to cover any discretionary expenses. The amount of money needed to cover things like groceries or gas for the month is calculated, withdrawn from the bank, and then divided into envelopes for each expense. Once you spend all the money in a particular envelope, you won't be able to spend any more money in that spending category for the month. If you prefer to use cashless payment methods, then you would allocate the monthly amounts and track your spending through the app or online.

Zero-based budgeting can give you flexibility during COVID-19 if your income isn't consistent or your expenses change from month to month. Since you start your budget over each month, you can add or remove categories as needed and increase or decrease the amount of money you allocate to your categories, based on your income.

Add up your monthly income
COVID-19 can add a wrinkle to your zero-based budgeting plans if your income isn't what you'd expect. If your hours have been reduced, then you may be making less money. Or if you've been laid off or lost your job entirely, you may be relying on unemployment benefits to cover the bills.

when you do your budget Zero-based, start by adding up all the money you can count on during the month as income. This can include money you earn at your regular job if you are still working and money you have received from a business or side business, plus any form of unemployment compensation you may be receiving.

Compare the total number to your pre-COVID-19 income to see if there is a difference, and if so, how wide the gap might be. This can help you when it's time to start allocating money to cover various expenses.

Add up your basic monthly living expenses
The next step is to find out what you plan to spend for the month. Again, this may seem different from your normal expenses, depending on how the coronavirus pandemic is affecting your daily income or expenses.

Read more: Setting a savings goal can be difficult, we help you do it

Start with your basic expensess of subsistence. These include things like:

Housing, whether it's rent or a mortgage payment, is likely to be your biggest expense, so make sure you budget for that first. Then you can allocate money to cover your utility bills, like water, electricity, or gas, and then move on to food and insurance.

if you have a budget In a tight spot due to COVID-19 related job loss, you may be wondering if you should take advantage of financial relief for housing or utilities. The CARES Act stimulus package, for example, allows many homeowners to temporarily defer mortgage payments. Several states have prohibited landlords from enforcing eviction notices for non-payment of rent during the crisis. And many utility companies have agreed to suspend disconnections for unpaid bills.