“No one likes the budget,” Hicks said. “Trust me, it’s the last thing people like to do, but this pandemic has really brought to light the importance of knowing what the numbers are.”
The pandemic has given people a good nudge in the right direction.
“Back in April, 30% of discretionary income (what people make) was actually going towards savings, which traditionally it’s at 7% of consumer income,” Hicks explained.
If anyone wants to jump in on the savings, Hicks said there is a budget rule known as 50/30/20. That means 50% goes to needs, 30% towards wants and 20% for savings. He said people should start saving as soon as they start earning money.
“One thing I hear more people say is ‘I wish I would’ve started sooner,’” he said.
The other piece of advice is for people looking to improve or completely pay off their credit card debt. He said to tackle the debts with a higher interest rate. Once that is paid off, move on to the next ones.
Hicks said one of the financial side effects from the pandemic is how it can drain the wallet if people work from home. He said they might be saving on gas but spending extra on food, electricity usage and work equipment.
“On average, people who are working from home are actually spending $100 more from what they were working from the office,” he said. “Unfortunately, one of the tax codes changed recently that you can’t get a deduction on unreimbursed expenses that employers won’t pay.”
He suggest people talk with their employer for a possible refund, if anything.
For a free worksheet for budgeting, click here.