Taking stock of your personal finances during COVID19
No doubt, the effects of COVID19 will be felt for years to come. This pandemic is not only a health crisis but also a financial one. While many of us have become hypervigilant about our physical and mental health, it is also important to manage our personal finances during this time of uncertainty.
Across the globe, Governments have imposed stay-at-home restrictions to help control the spread of the Coronavirus, which ultimately led to millions of layoffs and closed businesses. With virtually every industry impacted and unemployment rates soaring, I highly recommend taking a proactive approach to managing your family's finances.
Here are some things I've done to help ensure my family's continued financial stability.
Note: These suggestions are geared towards short-term financial management.
1. An honest review
This is the reality check. Worst case scenario - how long could you live on your emergency fund? Trust me, the answer could shock you, so prepare yourself. However, it is important to know where you stand so you can create a plan to make sure that you are financially equipped to weather the storm.
What are your total monthly expenses? How much money (liquid assets) do you have available to you? How long can you sustain your family on those funds?
In addition to our emergency fund, we've checked every bank and investment account to see how much cash we can potentially access if needed.
Note: Don't do this exercise mentally. Write everything down (on a piece of paper or use excel). It is my belief, and experience, that you are more likely to act on this information when it's written down.
2. Apply for Government benefits
Many Governments have rolled out various economic programs to help its citizens and businesses affected by COVID19. I urge you to do some research and apply if you qualify.
You may also want to check your local community boards (websites) for additional social assistance programs in your area. Every dollar counts.
3. Update/review your monthly budget
Dust off your monthly budget, it's time for a refresh. If you don't have a budget, please, please, please, make one. There are many templates out there you could use. In another post, I will share how we've set up our household accounts and budget.
Using a budget will help discipline the way to spend and save money. Seeing your monthly spending and savings written down will open your eyes and help you find savings you didn't know were there...trust me.
Task #1: Organize your budget by fixed and variable expenses. Fixed expenses like rent, property taxes, and insurance. Variable expenses like groceries and take-out, transit, and utility bills.
Task #2: Identify areas to decrease your monthly expenses
You will most likely find it easier to cut your variable expenses you have more control over time.
Some examples:
- Reduce/Eliminate weekly takeout, online shopping (there's nowhere to go so why buy new clothes?),
- Reach out to your credit card company to discuss available payment options
- Turn down the heat and wear warmer clothes in the house, etc.
For your fixed expenses:
- Talk to your landlord about payment options for your rent. Keep in mind that he/she may be dependent on your rent to make ends meet. Go into the discussion expressing your hope for a win-win solution.
- Defer your mortgage and loan payment. Canadian banks are offering their clients the opportunity to defer up to six months of their mortgage principal and interest payments. Reach out to your financial institution to see what you qualify for.
- Update or suspend your car insurance policy.
- Cancel or suspend subscription and membership fees
4. Save, Save, Save
You've found ways to spend less money every month. Don't find new ways to spend it. Save it!! You never know when you'll need it.
5. Be Smart
Above all, be smart with your money and health. No one knows how long this pandemic will last, so let's do our part to help stop the spread of this virus. By staying home, you protect yourself and others.
What are you doing to manage your finances?
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Disclaimer: I am not a financial expert. The aim of this post is to encourage others to proactively manage their finances. Please seek out a Certified Financial Planner for professional adv
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