COVID-19, How to Navigate Your Money During This Stressful Time
This is a very stressful time for so many reasons. This virus is scary. Watching the countries that it has hit before us here in Canada, makes it even scarier. With school closures and many businesses closing or reducing their hours, many employees and business owners will be hit hard financially.
The most important thing is to stay positive. Yes, that can be difficult with so much negativity in the news and on social media. Try to limit your time on social media if it is causing you stress and focus on tasks can help you stay positive. Maybe you need to turn up the music and dance around your living room or call a friend who you haven’t connected with in a while. Think about activities that you can do that will help you to stay positive.
Pause your financial goals.
With so many things up in the air right now for so many, as much as it pains me to say this, hitting pause on paying extra towards debt makes sense. While you still need to stay focused and keep working on your plan, I recommend setting aside any money that would have gone towards paying off your debt in a savings account. If you already have an emergency savings account, beefing it up now is a great idea. If you don’t have one, there is no time like the present to start.
Where should I stash my emergency savings?
For many, out of sight out of mind is a strategy that works best. Having it at another bank works well for many of my clients. For now, it makes the most sense to have it accessible, so opening a savings account at your main bank is the best idea. Once we get through this uncertain time, opening up a savings account at an online bank can help you to be less tempted to access it.
Spend your money very intentionally.
High stress situations can be triggering and lead to increased spending. Despite the recommendations to isolate yourself socially as much as possible, online shopping gives you the ability to stress shop from the comfort of your own home. Feeling isolated and concerned over items running out can increase our urge to shop.
What can we do?
We can be very intentional with our spending over the next weeks and months. Focus on buying only items that you need. Not only does this benefit us financially, but it helps others to be able to have access to what they need.
Stay connected to friends and family. Text, call, have video chats, play games, get creative so you don’t feel so isolated.
Take a hard look at your expenses.
If you are a budgeter, pull up your budget and identify items that you have an opportunity to eliminate or reduce. If you do not have a current budget, look back through your bank and credit card transactions over the last few months. What can you cut or reduce? Are there subscriptions you aren’t using, or items that you have identified you are overspending on? Get really cut-throat, when deciding what can go—it won’t be easy, but it will help you in the weeks and months to come.
This was an exercise we went through when I lost my job. I was amazed at how much extra fluff was in our budget that when faced with a huge shift in our income we did not even hesitate to cut.
Where should I start?
· Credit cards—call your credit card companies to request a reduction in your interest rate. I have had clients be successful in having rates reduced up to 8%!
· Communications bills—contact your communications providers and ask them what they can do for you to help to reduce your monthly bill. Using FB messenger is a great option if available, especially if you have kids running around making lots of noise. Our bill used to be over $400, it is now ~$250!
· Utility Bills—with it still chilly here, it is likely that you are in a higher month for your utility bills. Requesting to be put on equal billing could help you today but reducing your bills for the current month, and in the future by having the bill be the same amount each month.
· Grocery spending—I can think of no better time to start meal planning and only heading out to shop for groceries when needed. Planning out your meals for the next few weeks and shopping only once will help you spend less and give you the peace of mind to know you have a plan. If you are worried about expiry dates, lots of staples can be frozen, bread, milk and meat are all regulars in our freezers.
· Miscellaneous spending—this is a catch all of so many things. It is a category that can break your budget. If you have not been paying attention to your spending, reviewing your transactions can really highlight if this is an area you should be focusing on. If a lot of this spending is online here are some tips to be more focused.
o Remove your credit card numbers, actually having to get up and get your card could be enough to make your rethink a purchase.
o Unsubscribe from promotional emails, these used to be a trigger for me to spend. Now that they don’t hit my inbox, that temptation is not there.
o Make a commitment to yourself, to have a cooling off period for online purchases. Waiting 24, 48, 72 hours, or even longer can help you to evaluate if you really do want to make the purchase. The higher an item costs, the longer I recommend waiting for.
If your income stops or is significantly reduced, contact your lenders to explore options.
Many lenders, including mortgage lenders, allow you to skip payments. This will of course mean more interest and an increase to the overall cost of borrowing, but it has so many benefits to your cashflow. It will allow you to focus on other necessary expenses and take care of yourself and your family.
Learn from this situation.
If you feel ill prepared for this financially, ask yourself what you can do to feel ready for any similar future events. Let’s hope there isn’t another pandemic any time soon, but as I have experienced personally, life can throw you financial curve balls when you least expect them. Being more prepared down the road, can help you feel more secure.
Reach out for help.
Asking for help with anything can be scary. Asking for help with your finances, can be next level scary. The clarity you can gain from working with a financial coach can help you make changes that will impact you for the rest of your life. If you want to learn more about the process, or ask me a few questions about your current situation, you can book a free 20-min video call using the schedule button below.
Feel free to email me at: sherry@moneymindsetfc.com if there are any specific questions you may have.
During this stressful time, take a few deep breaths and think about what you are grateful for. Even better, take a few minutes every morning to write down what you are grateful for.
-Sherry
