How to Create a Standard Operating Procedure (SOP) for your Finances

by Sahirenys Pierce

In this blog, we will be going over how to create a Standard Operating Procedure, SOP, for your finances. This is going to be your go-to financial plan for how to manage your money during any financial downturn like a recession. It’s really stressful to make good decisions during the chaos, that is one of the main purposes of an SOP. The best way to prepare for these mental roadblocks is to create an SOP to breakdown each part of your finances. This way when hard financial times arise you can feel confident on how to maneuver through your finances.

Creating your SOP for your finances will be a work session that will require a pen and paper or even an excel sheet. Why? Because the last thing you want to do during a crisis is looking up phone numbers, due dates or even reviewing contracts. You want to take the busy guesswork out of your head and push that energy towards making smart decisions. On top of collecting important billing notes and contact information, we’re going to be going over your expenses. Making it easier for you to create your bare-bone budget once done with your SOP.

Open Communication

One of the biggest mistakes people make during a recession is hiding the real situation from their partner. This is called financial infidelity when you’re not truthful or open about changes in your finances. Which only leads to a lot of resentment and arguments down the road when they find out. I recommend to include your partner in the budget, taxes, and investment meetings to talk openly about financial changes. The more open you are the easier the conversation transitions into a problem-solving conversation.

The next part about open communication is to not hide your financial situation from your family. Now, I am not saying to tell them right away that you lost your job or that you have to move in with them tomorrow. Instead, work yon our SOP and create a well thought out game plan of how your planning on managing the changes. You never know, they might be positioned to help you financially or in other ways that you wouldn’t have considered. A lot of times our parents, siblings, or close relatives can lend a hand before things get out of control.

Evaluate the damage

The next thing you want to do when creating a standard operating procedure for your budget is to evaluate the damage. You can do this by looking at all your potential income streams, benefits, and assets. This can be in the form of side hustle income, unemployment benefits, and your emergency fund or investments. Hitting hard financial times are usually associated with losing your main source of income or going through an emergency crisis. Trust me, I know it’s not fun, but you need to figure out what you can work with while in this situation. Then start roll up your sleeves because we have to dig a little deeper and look at your expenses.

Cut, Keep or Reduce Game Plan

When creating a Standard Operating Procedure for hard financial times, it’s important to put some action behind it. We can do this by going up and down our list of expenses and start deciding which ones need to be cut, kept or reduced. The whole purpose of this SOP is to get you organized and in the right mindset to micro-tweaking your expenses during these hard times. I recommend to cut from the bottom up, AKA the easiest expenses to cut to the hardest. Remember, you also have the option to reduce expenses or even postpone until you’re in a better financial position.

During this work session, you should make a side list of alternative service providers, hardship programs, and discounts available if times get more difficult. This is the time to create a financial game plan B and C for if times got more difficult and a downgrade in services is required to match your budget. I would also create a plan D for if you have to move in with family or need additional help to cut, keep or reduce your expenses. Having this financial game plan can help you and your family be clear on what changes need to happen to stay afloat financially during hard times. This is the discussion and work session needed to build a successful bare-bone budget with poise.

Separate your expenses

The next part of your SOP is to review your current expenses. The trick here is not to just break your expenses down to create a budget, but create an action plan at the same time. Start by using the structure of the High-5 Banking Method to focus on organizing your expenses between your bills and lifestyle expenses. This strategy helps you keep your expenses in check by prioritizing your needs without combining your wants. Next up is digging into your bills to create an action plan as times get more difficult.

Now, as times do get more difficult you want to strategically pick when and how to lower your expenses. If you’ve lost your job or had a decrease in income, you have to start making budget cuts from the bottom up. I layered this blog from the hardest budget cuts to the quickest budget cuts. Because let’s be honest those are the bills that are stressing us out the most. That’s why I want to start with the bad news first and then go into the good news with some hope and more options. While reviewing your expenses, I recommend creating a contact list of all the companies and people you might need to reach out to.


Your Bills are going to be the most important expenses you need to organize and look into. Break down your expenses by the type of actionable options you have to consider, meaning not all bills are the same. Some are mandatory by contract and others you can negotiate or change easily. So let’s break down the bills you need to create an actionable game plan for as difficult financial times progress.

* Due to the COVID-19 situation, a lot of your lenders and providers are providing special Hardship Programs for your bills.

Bill TypeExpenses TypeAction
Contractual BillsHousingTermination options
Variable BillsUtilitiesCall to discount
DebtStudent Loans, Auto Loans, Credit CardsCall to postpone or negotiate
Flexible BillsPhone, Internet, Cable,  Insurance, and GroceriesConsider downgrading

Contractual Bills

Some of the hardest bills to get out of and to renegotiate are bills that are legally held by contract. The main contractual bill most of us have is our housing. Even if you’re renting or have a mortgage, this bill can only be changed by the statements discussed in the contract. These are the type of contracts that require you to either have a large amount of cash on hand or take a major financial loss. Other than being a mandatory need, most of us put contractual bills like our housing at the top of our budget.


So, I want to dig into housing for a little bit. For renters, what you want to look into are the fees and costs associated with ending your lease early. You also want to see what your lease agreement states if you’re not able to pay your rent on time. You need to stay cautious that these types of bills can affect your credit and renters’ history. That’s why it’s important to be proactive and contact the owner if you’re not able to maintain them. 

Mortgage Owner

Now, when it comes to mortgages it’s a little different. Owners can either refinance or even sell their homes if they need to. There’s a lot of millennials that haven’t owned their home for a long time and want to take advantage of lower interest rates. Refinancing can be a great opportunity to lower your monthly mortgage payments and/or lower your mortgage term. The best choice that will save you thousands of dollars is to create a game plan of paying off your home early. But, if you’re not able to maintain the payments and have pulled too much money out of your property, then selling might be your best option.

Variable Bills

When it comes to variable bills these are expenses that change on a month-to-month based on your usage. A popular variable bill is your utilities like water, swear, gas, and electricity. In my neighborhood water and swear are charged every other month, which makes budgeting a highly important task. During times of financial hardship, a lot of utility companies have programs that offer discounts based on certain income guidelines. If you don’t meet the income guidelines, you can also see what payment arrangements are available. Another tip is also to change the times of when you use your utilities to super-off peak times.


Now when it comes to debt this is a whole new monster. Some of these debts like student loans you can postpone, placed on income-based guidelines, or refinance. Some of the other debts like credit cards, car loans, and personal loans you can negotiate to postpone interest and payment or refinance. These are great options, to make sure your situation doesn’t affect your credit and help you save money. When going through hard times, I wouldn’t prioritize aggressively paying off debt or ignoring the payments due. Instead, call loan providers to negotiate a realistic minimum payment and push your money towards other responsibilities and needs.

* Go to your loan providers’ website to get educated on COVID-19 programs for Federal loans to pause interest and payment.

Flexible Bills

During hard times, it honestly does feel a little relieving to know that you do have some control and flexibility over your bills. Flexible bills are the expenses that you can instantly reduce, cut or even switch providers to get a better deal. Some of the most common flexible bills are phone, internet, cable, insurance, and groceries. Most of these bills you can downgrade or negotiate down with a simple call. You also have the option of switching to a less expensive provider or alternative provider to save money. An example of this is like switching your cellphone provider from AT&T to Mint Mobile or using an alternative provider for cable like Netflix or Hulu.

When it comes to groceries, this cost is a mandatory need that can be controlled with meal planning and prepping.  Taking control of your food usage can help you save money and decrease your food waste. This is something we all have to practice even if you’re on food stamps, WIC or are just trying to lower your grocery budget. It’s times like these that we have to re-evaluate how we manage our necessities and our food consumption is definitely on that list.

Lifestyle Expenses

When it comes to health and economic downturns, like we’re facing now, lifestyle changes are necessary. The fastest way to cut your spending is to look into your lifestyle expenses which are only wanted, not needed. I know no one wants to give up their lifestyle, but when hard times come you have to learn to pivot. I highly recommend cutting most of these expenses and find a way to reduce the ones you want to keep. This way you can push more money towards your bills and savings.

Here is a list of Lifestyle expenses within your budget that you can dramatically cut and reduce to save money.

  1. Personal Care
  2. Eating Out – Fast Food and Restaurants
  3. Entertainment
  4. Clothes
  5. Subscriptions

Educate Yourself

While creating your SOP, I recommend that you educate yourself on the service that can help you during these times. I know it can be a big hit to your ego, but don’t let your ego crush you from getting the help that’s available to you. We live in a country that takes a percentage of your income to provide you with temporary help and government assistance if needed. Again, you’ve already paid for these services so use them if you need them without shame. But once you get back on your feet, I recommend quickly transition off them. I know it can get a little comfortable or complicated once in the system.

Here are some of the top government and company programs I recommend to apply for and do more research on:

  • Food Stamps and WIC
  • Unemployment benefits
  • State Healthcare Program or Obama Care
  • Utility Discount Program

* Many companies are also offering different programs to help during this COVID-19 pandemic. Please make sure you call your debtors and service providers to see what options they can negotiate. I’ve seen many companies offer a range of assistance through their Hardship Program from postponing payments, interest, and even payment and interest. This is a great opportunity and aid for those who have lost their jobs.

Closing Statement

I want to close this blog by wishing nothing but blessings to everyone who’s going through a hard time health-wise and financially. Creating an SOP for your budget is something we all have to do to get out mindset right during hard times. I know it’s hard to avoid getting anxious or freezing under all this pressure, but that’s the power to having a standard operating procedure. It’s the roadmap of what to do when you’re under pressure and you still have to perform.

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