How to Write Your Crisis Budget
It’s time to plan our way through the rest of this pandemic

We’re living in a time right now when people are finding themselves unable to pay their bills. They’ve not done anything wrong, and they’ve not been irresponsible, they’ve just been wiped out by the crisis that financial experts have been warning us about for years.
For those of us who believed the financial soothsayers and have saved up a sizeable crisis savings account, you should be commended for your discipline and forethought.
But for the rest of us, it’s time to start writing our crisis budget so that we can get through this pandemic without losing our homes.

Get Out Those Highlighters
Before we begin to look forward, we need to look back.
To write a budget of any kind, we first need to understand how we’ve been spending our money over the past three months.
We need to open up an Excel spreadsheet, load up our bank history, and start typing everything we’ve spent money on. We should be as specific as we can when typing in what each item was, how much it was, and which category it falls into.
I like to colour code my entries so that I can understand everything at a glance.
Blue — Essential
I put all essential spending in blue; this includes my rent, utilities, and anything else that must be paid.
Green — Flexible Essential
I put all my flexible essential spending in green. These are items that while essential, can be altered with discipline. For me, the main culprit is food.
I need to eat, but I don’t need things like roasted brie cheese, which in Shanghai costs $20. Other things include clothing, cleaning supplies, etc.
Purple — Luxury
The final category is luxury spending; I write these in purple. This category has a lot of items, including video games, Netflix, and endless amounts of cat toys.
Now that we can see our past three months laid out on a spreadsheet, we know what our spending normally looks like.
If you haven’t made a budget before, this information may be shocking to see laid out in front of you. It’s always hard the first time you see that you’ve somehow spent literally thousands of dollars at Starbucks.
Turning a regular budget into a crisis budget isn’t difficult, but it also shouldn’t be rushed. You’re going to write three drafts of the budget, each time making changes. It sounds crazy, but hear me out. There’s method to the madness.

The Three Drafts to Financial Health
Round One
The first time you write your crisis budget, you’re going to strip it to its bare bones. That means cutting out all luxury spending and cutting back on flexible essentials as far as you can.
This means no takeout and no bloody Starbucks. Instead, you’ll budget for beans on toast for every meal of every day. After that, it’s time for round two.
Round Two
After slashing your spending back to the bone, you should notice that you have a significant amount of money that’s now unaccounted for.
With this money, take 50% and save it. This money is going to be the beginning of your crisis savings account.
Keep this money locked away in case the day comes that you can’t pay your essential bills, then on that day, you’ll have something to fall back on.
If you already have enough money saved and feel comfortable with the amount, you can start a new account for a future pandemic.
If you don’t know how to save money, or you’re not sure through which method you’d like to save it; then don’t stress because you’re not alone.
We here on Money Clip are going to start saving our money together starting on Friday, June 5th, so if you’d like to join us and get some tips, click here to read all about it.
Round Three
For round three, you should still have 50% of the slashed money remaining. With this money you’re going to carefully, and with a lot of consideration, start putting that money back into bolstering out both flexible and luxury spending.
We don’t want to live with absolutely no enjoyment or our mental health is going to unravel and we’ll lose our minds. But we also don’t want to spend like maniacs and pay no attention to correcting our bad habits in the name of protecting mental health.
Instead, we’re going to add back the luxuries we need to stay happy. For me, I can’t eat beans every night; so some of that money is going to fill out my food budget. I’m not buying any roasted brie, but I will have some cheddar.
By making a conscious effort to allocate money to the luxuries that matter most, you can enjoy them without feeling guilty. Each luxury has been chosen with intent, there are no longer unexplained or unknown transactions draining your bank of all its money.

So That’s It
This is the process I go through when making a crisis budget.
Throughout three re-writes I slash all expenses to the bone, allocate 50% of new-found money to crisis savings, then carefully and strategically place the remaining 50% back into the budget.
I don’t recommend locking up your crisis savings in investments that can’t be liquidated quickly; but don’t go the other way and put money in accounts where the interest rate is too low or below zero. In some countries right now, a savings account may actually cost you money because interest rates are so low.
So get started on that budget, then join us on Money Clip every Friday to learn tips about how you can save more productively.






