Getting through a global pandemic can mean looking after both your personal and financial health at the same time. You can help promote overall wellness in your life by focusing on managing your finances more closely.
With record numbers of Canadians reporting lost work amid COVID-19, the relationship between finances and health is becoming more apparent.1 As the virus continues to spread around the world and across Canada, your physical health is a top priority. However, the pandemic isn’t the only threat to your well-being. For many Canadians, money worries are the greatest source of stress, even more than work, health or relationships. That can take its toll.
Research by the Financial Consumer Agency of Canada indicates that 48% of Canadians lose sleep over financial worries. Those dealing with financial stress are also twice as likely to report poor overall health and be more susceptible to serious health problems like heart disease, high blood pressure and depression.2
Read on to learn more about simple and effective strategies to help you to build a stronger mental and financial health, no matter the economic backdrop.
1: Know where your money’s going and control spending
The effort to halt the spread of COVID-19 is putting pressure on many Canadians financially. While a number of new programs have been introduced to ease the burden, they may not cover all of your expenses. To ensure you come through this crisis in good financial shape, consider cutting back or eliminating certain expenses to manage your current finances.
With the questions around the economic impact of the current health crisis, it’s important to consider your cash flow and re-evaluate your expenditures. If you need to rearrange and reprioritize your budget, start with non-essentials you can easily give up. Review your current spending and determine what additional bills you could eliminate. This may include reviewing subscription fees to digital services, limiting online shopping or pausing reoccurring charges on things like gym memberships.
I can help you take stock of your finances and understand how much cash you have available and how long you can realistically live on that amount, based on your current expenses. I can also help to ensure your budget can accommodate potential fluctuations in your cash flow. This knowledge alone will help give you the confidence to manage your money better.
2: Look after your financial health
The global pandemic is a financial emergency for many. If you’ve been building a ‘rainy day’ fund and now find yourself unable to cover your expenses, this is the time to use it before resorting to credit. If you had no emergency fund in the first place, this is an opportunity to start building one, if possible, or start planning to build one when the financial pressures ease. This crisis has reinforced the importance of a cushion of savings to protect against the unexpected and ease uncertainty.
Managing your budget more closely and reducing unnecessary spending is key to your finances and credit management. Reduce unnecessary credit card expenses by eliminating purchases you can live without.
Many Canadian banks are offering to reduce credit card interest rates and mortgage deferrals to those consumers facing financial hardship due to the current crisis. If you are exploring these options, read the fine print on your credit card to know the potential impact on your credit score, should you request financial relief. Terms and interest rates can vary depending on the bank.
Part and parcel of keeping your credit on solid footing is checking your credit score regularly to identify and address any potentially fraudulent activity. It’s another step in ensuring your credit is in good standing so that you have access to it when you need it, on your terms.
I can help you get a handle on your debt and get your finances in shape for today and the future. If you’re experiencing financial difficulties and considering any payment deferrals, please let me know so that I tailor my advice and your financial plan to your situation and help ensure you get the right support for your needs. You don’t have to deal with these financial complexities by yourself.
3: Keep your emotions in check
Mixing money and emotions is rarely a good idea. As it relates to your finances, pinpoint what your emotional triggers are and how you react to them. Maybe you’re a stress shopper, or you’re considering selling some of your investments because of recent market volatility.
Having a plan not only for dealing with the unexpected but for meeting your short- and long-term goals can help you avoid self-destructive behaviour and manage your emotions around the stock market. A goals-based financial plan can allow you to focus less on annual returns and day-to-day volatility in your investments and more on outcomes and whether you’re achieving your targets.
It’s important not to let your emotions take over when making financial decisions. For example, try to maintain your investment strategy and allocations even when the market is fluctuating wildly. Don’t buy into investor herd mentality or fear what the market is doing. Remind yourself that no one can predict the future and that short-term market movements have little impact on long-term wealth.
Likewise, don’t get overexcited about the effects of a possible recovery on your investments and let your emotions cloud your judgement. Stick to the investment plan you developed and stay the course. Making regular contributions if you can and reinvesting distributions is a proven approach to successful long-term investing. If you’re concerned that current events may jeopardize your long-term financial goals, then we can schedule a time to review your existing plan and make any necessary adjustments.
4: Replace panic with preparedness
When it comes to financial planning, panicking or reacting to the news isn’t a helpful approach. Use this time instead to get a handle on your financial situation, including having enough in emergency savings. It’s about saving what you feel is necessary to give you comfort.
Although the deadline for filing 2019 income tax returns has been extended to June 1, 2020, consider filing now if you’re expecting a tax refund to help your cash flow and cover your expenses. Even for those who owe, it’s better to know sooner than later what you need to plan for in terms of taxes due, particularly with the extra time to pay this in 2020.
If you anticipate financial hardship due to COVID-19, our infographic outlines some of the main financial relief available from the federal government. There are several questions to consider before you sign on to one of the support programs. Before taking advantage of any of these programs, remember that I’m here to help you review your finances and offer guidance.
Your overall health
Better mental and physical health, higher productivity and increased confidence in handling money matters are just a few of the benefits of good fiscal health. While our current environment can be unnerving, staying calm and taking actions to manage your financial wellness will position you to weather the storm.
Part of my role as your Financial Advisor is helping you feel prepared financially, and it’s never too late to start. We can work together to create or review your financial plan to ensure it meets your needs and helps you sleep better at night. This includes accounting for contingencies that may result from this crisis – everything from changes in your job or living situation to supporting your family members.
For more ways to improve your financial health now and over the long term, contact our office today.
1Global News, “44% of Canadian households report lost work amid COVID-19 pandemic: poll,” March 25, 2020.
2Financial Consumer Agency of Canada, Financial Stress and its Impacts, 2018.