Protecting your Financial Health during COVID-19
Along with health concerns, the COVID-19 pandemic has left Canadians facing financial uncertainty and stress—many millions applying for some form of federal emergency unemployment aid in the first few weeks alone.
If you’re worried about your finances, the following tips and resources from our experts may prove helpful during these challenging times.
Make a plan. Even if you had a structured household budget before the pandemic, your income and expenses might have changed. Track your revenue and expenditures over the next few months, writing down all the money coming in and out of your bank accounts. Take particular note of what is essential, like shelter and food, and what is not.
Understand your debt. List all your debts, including the interest rate on each, and the minimum payments and due dates. Having this on paper will help you to plan and prioritize.
Ask for help. If your budget isn’t sufficient to cover financial obligations such as debt repayment and bills, protect your credit score and take action before you miss a payment. Relief programs are available, but creditors and billing companies will not be aware of changes in your situation until you reach out to let them know. Banks, credit card and mortgage companies, and other businesses are willing to work with clients to ease their financial burdens. Call them directly to inquire about options such as payment deferrals, reduced interest rates, or other solutions.
Get resourceful. In times of stress, it’s natural to feel worried or overwhelmed by thinking too far into the future and creating “what-if” scenarios that may never happen. Getting detailed information and formulating a plan will help you focus on what you need to do next. Ask yourself what you can do right now, and be as specific as possible. Brainstorm and formulate a plan based on your ideas.
Save where you can. Changes in your work and family situation may have reduced your monthly expenses. Staying at home can save money that you usually spend on childcare, commuting, travel, dining out, or entertainment. These funds are now available to be reallocated to savings or to help pay for essentials.
Here are additional ways to lower everyday costs:
- Rethink your grocery budget:
- Plan your meals and cook in bulk
- Consider generic options instead of name brands
- Grow your own vegetables
- When ordering takeout, avoid delivery charges by picking the food up yourself
- Research and shop for lower-cost alternatives to your regular expenses such as cable, cell phone, or internet services
- Look for expenses that you might be able to reduce or temporarily eliminate:
- Subscriptions to online music or books, streaming services, magazines, newspapers
- Clothing and grooming or beauty expenses
- Consumable habits, such as smoking, or alcohol and take out coffee consumption
- Adjust your thermostat by a few degrees and turn off lights when not in use
- Determine what you want vs. what you need—if you don’t need it, don’t buy it
Don’t forget to review your insurance
Are you looking for the most competitive insurance rates? The lowest price does not always mean the best coverage for you. Cancelling a policy that adequately covers your risk may be a poor financial decision, in the long run, should you find yourself without proper coverage during unforeseen circumstances. To read more about this topic, visit our blog page.
Give where you can
Financial donations may not be an option for you at the moment, but our communities are still in need. Consider donating time, labour, or other skills to charities in your community. Check your favourite local charity’s website or give them a call to see if they could use your help.
Review your investments
Seeing losses in your retirement savings account is shocking, especially after the growth we have witnessed in recent years. Despite how it feels, price fluctuations are regular occurrences in the stock market. Before COVID-19, there was 9/11, SARS, the Dotcom Bubble, the Great Recession—the list goes on. Through past crises, the downward market has lasted days, months, or years; however, it has always bounced back and rewarded patient investors in the end. See our blog for more information on this topic.
Continue to make regular contributions to your savings if financially possible. Saving for retirement should be viewed as a long-term plan. If your timeframe has not changed, then your strategy shouldn’t either. Avoid timing the market—you don’t want to sell at a loss and miss the opportunity to benefit from the rebound.
We’re here to help
Visit Canada’s COVID-19 Economic Response Plan page for the most up-to-date information on helpful government programs that offer support for individuals.
For more information, please reach out to your Cowan Insurance Group Pension consultant.