How to Adjust Your Finances In Times of Uncertainty
A friend asked how my clients are dealing with all the financial uncertainty during this global pandemic.
And it hit me – none of my clients had called in a panic. We created a solid financial plan regardless of their income, built in an emergency fund to provide security during times like this and their money mindset is on a different level than most. But most importantly, they know how to adjust their finances in times of uncertainty.
None of us have lived through a global pandemic of this nature and with all the fear and anxiety it may be overwhelming to even think about or face your finances at this time. But what you do during this time, will determine how well you get through this financially.
Here are a few ways that you can adjust your finances in times of uncertainty:
1. Create a Spending Plan
Review your typical monthly spending and determine what items are true wants vs. needs. During times like this it’s really easy to see how much we value toilet paper! Adjust your spending so that your needs are met and save the additional money that was previously spent on your wants.
Tips to Reducing Spending During This Time:
Cancel memberships – most memberships to gyms or physical spaces have automatically been suspended. However, this is a good time to review any other memberships that are automatically charged to your credit card that you haven’t used for months.
Take advantage of free membership offers – lots of companies are offering free memberships during the COVID-19 crisis (ie. QuickBooks, Adobe, etc.) and lots of fitness studios are offering free online classes (ie. Peloton, Orange Theory, etc.). Take advantage of these offers wherever you can.
Life Insurance Premium Holiday - If you have a universal life or whole life insurance policy and your policy has investments, you may be able to put your policy on a premium holiday and stop paying premiums while your policy remains enforce.
Cut ‘Nice To Have’ Services – If you have monthly subscription boxes, cleaning services, food delivery services, etc. that are costing you lots of money, now might be the time to put these on pause. Although convenience is great, your focus right now should be on increasing savings and creating financial security.
2. Build an Emergency Fund
Regardless if you’ve already started an emergency fund or still have it on your To-Do List, this is the perfect time to recommit and focus on putting money away. Be sure to save something from any source of income you are receiving right now, regardless of how much you receive (ie. job income, business income, government assistance, etc.). Also, if you’re working from home you’re likely spending less on gas or eating out. Consider saving these funds to build your emergency fund even faster.
Read this Blog Post to learn how to successfully build an Emergency Fund: 4 Steps to Build an Emergency Fund
3. Continue Paying Minimums on Debts
Even in the face of a global pandemic our bills still need to be paid. If you can, be sure to cover the minimums on all debts to avoid negative impacts to your credit score or interest rates. If you need to leverage debt to make it through these times, use the debt with the lowest interest rate first to save on interest costs.
Some financial institutions are offering financial relief support and allowing you to stop making payments for 6 months, although interest will still accumulate. Take advantage of these offers if you absolutely have to. But remember, depending on the type of debt the interest costs that accumulate over the 6 months can be significant. You will have to pay this off at some point so don’t think you are getting away for free.
4. Create a New Way of Being
Always had a hard time changing your spending habits? Me too. I vowed I could NEVER live without my daily Starbucks or Tim Hortons fix (whichever drive-thru is the shortest on my morning commute). But living through COVID-19 has created a new reality. My Eating Out Budget is at a sexy all-time-low and I’ve realized just how much we can change our spending habits when we’re forced to do so. Use this opportunity to create a new way of being when it comes to spending and saving your money. Take a moment and write out all the ways you wish to be when it comes to managing your finances. Start to become that person right now and create the financial YOU that you always dreamed of becoming.
5. Take Advantage of Government Programs that Provide Financial Support
We are blessed to live in a country where the Government has the financial resources to provide relief to Canadians during these uncertain times. Be sure to take advantage of all government programs that are applicable to your situation. Remember, your mindset matters - Do not express guilt, shame or frustration for needing this support. This support is truly a gift from the Universe, so be sure to treat it as such. Use the money wisely and don’t forget to express complete gratitude.
For more information on Canada’s COVID-19 Economic Response Plan for both individuals and businesses please refer to:
https://www.canada.ca/en/department-finance/economic-response-plan.html