5 Tips for Surviving Economic Uncertainty

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It certainly has been a challenging start to Spring as we’re all grappling to make sense of the events around us. What will the immediate impact be on our jobs, businesses, investments and our physical and emotional health? When will we be able to “get back to normal”? And what will the longer-term implications be on our economy, our children, our retirement?

The most difficult thing for all of us is that no one knows for sure, and that includes our experts and leaders. Instead, we are being asked to sit tight, stay in the moment and wait. This is not comfortable for an action-oriented world where speed and growth have been our norms.

On top of that most of us are facing immediate consequences within our own families and communities. In the last 2 days I got word that my niece was laid off and prospects in the fashion industry are well, nil for the foreseeable future. My sister-in-law’s father is in the hospital with a blood clot – and because of COVID, no one is allowed to visit him. A good friend is very ill but tests and surgeries are being postponed.

This is the new reality that most of us our experiencing with no immediate end in sight. And as a result, most of us are feeling some flavor of anxiety, depression, or overwhelm. I hadn’t thought of my emotions as grief until I read this thought provoking Harvard Business Review article.

As uncomfortable as it may be, this collective “time-out” gives us the opportunity to reflect on what is working well in our life and in our world and what isn’t. For Sheila and I, it’s been an important reminder of why we left the traditional financial planning industry and created a company based on our values of service, transparency, trust and collaboration.

We have been having a lot of conversations with our clients in the last few weeks and while they are not immune from the financial and emotional turmoil, they are more prepared and more resilient financially than most.

The current crisis has strengthened our commitment to the work that we do and the clients we serve. We know that Canadians need us and our fellow advice-only financial planners now more than ever.

Here are the top five tips we’re sharing with our clients to reduce stress during economic uncertainty.

1. Figure out how much you need to cover your expenses

Believe it or not, this can be more liberating than terrifying. Worrying about how you would survive on a reduced income is all the more anxiety producing when you don’t actually know how much you need to live on. Figure out what your basic expenses are – chances are you are now spending less than usual on extra’s and you can be more realistic with what your Needs vs. Nice to Have’s are. Download our Spending Savings Plan worksheet.

2. Develop new Cash Saving Habits

Meal Planning

Take this opportunity to develop cost saving habits at home. Meal planning is a great way to ensure you use all the groceries you are buying and not wasting money by throwing out food you don’t use. Not only are you efficiently spending your money, but by planning your meals you can ensure you and your family are making healthy dietary choices.

Cutting back on “Nice to Have’s”

Take the time to re-examine your spending habits and priorities. Once the crisis has passed, perhaps that weekly trip to the salon for manicures, while a nice treat, is something to scale back to once a month or perhaps only for special occasions. Other discretionary expenditures like travel, eating out, or home décor are ones that you want to re-evaluate. Not necessarily eliminate entirely, but cut back on and re-direct funds to debt repayment or savings.

3. Build Your Emergency Fund

In situations like the one we are all facing, having the added security of an emergency fund is reassuring and in some cases critical. If you’ve been able to build an emergency fund, this may be the time to use those funds. If not, you may have a line of credit which may come in handy to cover some of your expenses short run.

If you find you have extra cash at the moment, you can start or add to your emergency funds by saving any monies that you’re not spending on travel, going out for coffees, meals or after work drinks.

4. Remind yourself why you invested, not on what’s happening in the markets now

It’s hard not to take the money and run when markets turn turbulent, but before you cash out, think back to your original investment goals. If your retirement is still 7 to 10 years away, there is time for the markets to recover and there are bound to be ups and downs along the way. If you are already retired, if possible, fund your expenses with money you have in your pensions, cash or other liquid investments to cover your needs while your investments recover. If you don’t have cash savings, then speak with your investment advisor to ensure that your investment income is coming from the bond or cash portion of your portfolio.

It’s now especially important to take a longer view of investments. If you weren’t planning to cash in all your stocks or mutual funds now, it’s no time to panic and change those plans. Markets move in cycles and this is unlikely to be any exception. There are even some investors, quick to see a silver lining, who are snapping up stocks at these lower prices.

5. Get Support

There are many federal and provincial initiatives to assist Canadians whose employment is impacted by COVID-19 including direct payments and opportunities to defer mortgage payments and other expenses, like student loan interest and hydro in some provinces. See COVID-19 Updates – Additional Resources section.

If you are worried about keeping up your debt or credit card payments, contact your lender sooner rather than later.

As we navigate the new waters, we will endeavour to share the tips, tools and the resources that we are using for clients and ourselves. For the near term, we will be posting more regularly on our blog and publishing our newsletter weekly instead of monthly. Please let us know if there are topics or questions that you would like us to weigh in on.

Stay healthy!

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