The pandemic associated with COVID-19 has negatively affected tens of thousands of Canadians physically and mentally, but many more have been affected financially.
Whether due to reduced work hours, a complete loss of job opportunities or one’s small business being permanently closed, the financial devastation is very real for many people.
A recent survey showed 35% of Canadians feel they may never recover financially, and almost 45% say they can not survive a second wave of the pandemic if it worsens over the winter.
Our newsletter this month is meant to assist our clients and their family members as we work through the end of an exceedingly difficult 2020, and what appears to be an even more challenging 2021.
#1 – Make a realistic budget and stick to it
- Our grandparent’s expression of “don’t spend more than you make” has never been more important, so examine your monthly “Cash Flow” of earnings and expenditures.
#2 – Build an Emergency Fund
- Ideally, save 10% of your Net Income, however, due to today’s circumstances, the number should be adjusted to what your budget allows. Be prepared for a long winter with COVID-19.
#3 – Look for side work in the “gig” economy
- If you feel financially vulnerable even with a steady paycheck, consider adding on part-time or contract work if possible.
#4 – Consolidate more expensive debt like credit cards
- A personal loan, or a Home Equity Line of Credit (if you have the luxury) can reduce the interest charged in many cases by 50 – 70%.
#5 – Do not go further in debt
- If a loan was used to consolidate credit card debt, consider locking up your credit cards until the debt is paid off.
- Major purchases should be given careful consideration, especially if the purchase is to be financed.
#6 – Reach out to creditors should you experience job loss
- All creditors including banks, utility companies and even Canada Revenue Agency (CRA) would rather work with a client who is proactive and upfront about their financial situation. Do not avoid those you owe money too; it only inflames a bad situation.
#7 – Further your workplace skills and education by taking online courses
- We may all have more time on our hands this winter and if you can upgrade your work skills, now would be a perfect opportunity.
#8 – Renegotiate expensive cable, internet, and cell phone packages
- Every provider of these services would rather negotiate a lower monthly price with an existing customer than lose you entirely.
#9 – Negotiate with your landlord for rent or utility relief
- Most landlords would rather take a little less during difficult times like these to keep a good existing tenant than to take a chance on a new unknown tenant.
#10 – Consider working from home permanently
- The pandemic has changed the way the world is doing business and if you can save time and money by working from home full time, it is worth broaching the subject with your employer.
- Travel costs, wear and tear on a vehicle, eating out lunch & coffee, are all expenses that can be reduced by working from home
#11 – Take it easy on online purchases
- Yes, the first few months was a novelty for many of us who finally used Amazon or Wayfair for the first time, but do these purchases really fit in within your Budget?
#12 – Cut back on the smaller luxuries
- The $6 Starbucks Latte (with tip) accompanied by the $3 croissant really adds up if it is a daily treat.
#13 – Beware of fraudsters and scammers trying to capitalize on someone else’s misery
- It happens every time a natural disaster occurs, and it is happening now as con men are preying on those looking for legitimate online work opportunities.
- Avoid any “get rich quick” scheme promoted online.
#14 – Review homeowner’s and car insurance packages
- If you are no longer using your vehicle to travel to work, consider changing the business use classification ICBC charges you for. This can reduce premiums by 20% – 30% depending on where you live.
#15 – Develop an exercise regime geared for you being at home
- Work with a gym or exercise studio offering Yoga, Pilates, or personal training with Zoom capabilities.
#16 – Plan out how you will deal with the upcoming Holiday Season
- Traditional office and personal Christmas parties will probably be nonexistent this year, along with all the spending on expensive gifts.
- Set a budget on what you can afford and stick to it. Explain to family members how COVID-19 has affected you financially. You may be surprised to hear that they are also in a similar situation and relieved that they are not obligated to spend money they cannot afford.
#17 – Re-evaluate and diversify your investments if applicable
- Now is a good time to decide if the riskier investment you made years ago should be retained. Are Bitcoin currencies, stocks in underperforming marijuana producing companies worth holding OR would you be better serviced by applying these assets towards paying debt?
#18 – Have a virtual meeting or phone call with your financial advisor
- Talk about how the market downturn may affect your early retirement plans. Discuss realigning your portfolio with more funds/stocks geared for the current surge in technology that is poised to continue doing well as COVID-19 plays through our economy.
By Karl Jung CLU, http://jungfinancialservices.com/