In February of this year, the word recession 2020 was googled over 75 million times according to Forbes Magazine. Was this a sign of collective worry before we knew we were dealing with a global pandemic? We may never know for sure. Also, keep in mind several forces were keeping economists up at night on the heels of the COVID 19 outbreak:
- Trade tensions with china
- Rising oil prices
- High personal debt levels with Canadian households leading the way on this front. More on this later.
Now that world economies must face an impending recession head-on, here’s what you can do to build a solid financial future for you and your loved ones.
Keep Calm and Carry On
In a crisis it’s only natural to want to learn as much as possible about what is happening. Especially when we are dealing with a health crisis of this size and scope. Getting the facts on how to minimize the spread of a virus and how to keep your family safe is essential – Unfortunately fear also sells. The 24-hour news cycle tends to prey on your anxieties, especially when so many of us are worrying about holding on to our jobs, health and savings. Don’t be surprised if you end up watching the news all day with a pillow over your head waiting for the world to end. A good practice is to limit your news consumption as much as possible and turn your attention to the future you want to create for yourself and your loved ones.
Avoiding tuning in all the time will also give you the energy to remain laser-focused on the financial plan you will need to create in order to ensure your family will recover from this. Here is a breakdown of financial steps you will need to take now:
Practice Austerity Measures
Canada much like the rest of the world’s economies has been in lockdown. What this means is you have access to the basics of life – food, shelter, transportation but not much more. Now is the time to take a closer look at your budget and reduce non-essential spending as much as possible. Are you driving less? You’re probably not spending as much on gas as you planned. In fact, you may be able to see if you qualify for a rebate on your insurance premiums by contacting your insurance company. If you have health insurance you may qualify for a rebate on these premiums as well since your not able to take advantage of your benefits at this time.
Review the last three months of your account to get an idea of where your money is going. Attention spenders: the government has given you a head start on this!
Eliminate Debt as soon as Possible
Canadians lead the way in carrying the highest record of household debt as compared to other developed countries. For many, this debt is going on a credit card. Contact your creditors with the goal of reducing your interest costs as much as possible. Because of the coronavirus, many financial institutions are offering opportunities to reduce interest on your debts. If you are experiencing financial hardship you can also apply to defer your debts for up to six months. Contact your financial institution for more information. Keep in mind the less you owe the less you will need to pay back especially if you become suddenly unemployed.
Build a Financial Fortress
Do you have a financial cushion you can rely on if your financial security becomes a bit shaky? There has never been a more important time to create one. The good news is you still have time. The cash you planned to spend on non-essentials can now be redeployed toward you paying off debts and building your financial fortress. If you are losing sleep about your finances building a fortress plan will help…
It’s tempting with so much bad news to put the brakes on your investment plans or worse cash in when your portfolio takes a nosedive. Take a deep breath. Hang in there. History has shown that investors who have stayed in the markets and doubled down on saving more when the markets are down are rewarded handsomely for not following the herd.
Cash in on Government Programs
The government has introduced a number of programs to help you get through this. To create the best financial outcome for you and your family, find out what you are entitled to. Check out the link here for more information. https://www.canada.ca/en/services/benefits/covid19-emergency-benefits.html
Invest in Yourself
This may be a good time to upgrade your skills, beef up your resume or investigate opportunities to create a secondary stream of income. Invest in yourself and plan to stand out as the job market becomes more competitive. Pursuing a secondary income in a new field could even lead you to an exciting new career path!
Remember the key to securing your financial future is thinking long term and committing to your goals no matter what…