PAY M E N T H I ST O RY

on the money

BUDGETING IN A RECESSION

Now more than ever, personal budgeting is necessary. Some local experts offer their advice.

WORDS: FELICITY BOSK

Creating a budget can seem like a credit counselor at FamilyMeans, as daunting task, but in financially insewell as a coach for the McDonell-Regis cure times like today, it’s an important youth soccer team. He said that one skill to have. People talk a lot about the mistake new college grads tend to make importance of creating and maintaining is biting off more than they can chew a budget, but why does it really matter? financially.

“Its important to keep track of fi“There’s an old cliché: You don’t nancing,” said Thomas Kemp, professor plan to fail, you fail to plan,” Clark said. and chair of the department of econom“People I meet in financial distress ics at UW-Eau Claire. ended up there due “A simple budget can to lack of planning, so be as basic as openit’s good to pause and ing a spread sheet on Google Docs or Excel THERE’S take stock of where you are, and take and just trying to jot down about how much AN OLD assessment of what’s going in and going money you have each month, or how much CLICHÉ: YOU out.” When asked how you think you have. It doesn’t have to be DON’T PLAN to best prioritize student loans in a budget perfect. And then write down how much TO FAIL, during a recession, Clark said it is never you spend in certain categories.” YOU FAIL TO good to not pay your loans. If you have a Kemp said to create a category PLAN. federal student loan, it is in deferment for “needs” like right now – meaning rent, loans, utilities, they aren’t asking for travel, and grocerpayments and interies, but also “wants” est is not accruing. like entertainment and small impulse Some private loans are deferred at this purchases. He said that a budget is a time as well, so it’s best to contact your way of asking yourself, “What do I value creditor to find out. If not, it’s good to in life?” and allocating your money in a be in contact with them about how to way that works for that. Once you have make payments you can afford. Clark an estimated budget, he said, you can go said that most creditors are willing to a week or two and come back to it and work with you if you are willing to work see how your spending ended up alignwith them. ing with how you wanted it to. In a strong economy where you know

Joseph Clark is a certified consumer you have enough money after bills, it might not seem like a big deal to keep track of your finances. This can change dramatically during a recession, like the one we are in now. People learned during the 2007-09 “Great Recession” that it is important to save as much as you can in case of a job loss and to avoid financial risks.

Kemp said the current pandemic-related recession is not very similar to the Great Recession, but he advised that during a recession you should try to build and maintain useful money skills.

“There’s really no comparison to this,” he said. “This is more like a hibernation. I still believe that’s the best analogy we have because through our own choice we basically stopped or slowed the economy. That’s not what happened during the financial crisis 10 years ago.”

Creating your first budget can be overwhelming, but it’s less overwhelming than not knowing exactly how much money you have coming in and going out.