Hard lessons in personal finance have rained down on us since the pandemic began.
The Pandemic Personal Finance Update has tried to keep track of them. The first instalment appeared March 23 and covered falling stocks and “wartime budgets” for families. Later editions looked at topics such as the safety of bank deposits and wills, why you should clean out your big-bank savings account, free financial planning help, the challenges ahead for retirement saving and how Canada is turning into a country of savers.
This 10th instalment of the update will be the last. Let’s look at 10 steps you should have taken already to guard your financial well-being, but that can still be done now with great effect.
RE-IMAGINE YOUR BANKING
Cheques and cash are close to toast. Who knows what’s living on those bills, coins and paper cheques? Send an e-transfer instead if you can, or use electronic payments via debit, credit cards or Apple and Google payment options.
Online banking is great, but mobile banking is where you reach the peak of convenience and control over your finances. Don’t fight me on mobile banking. Download your bank’s app for smartphones or tablets and check out how much better it works than the website or, God forbid, branch banking.
GRADE YOUR FINANCIAL PLANNER OR INVESTMENT ADVISER
Just one question here: What value did your planner or adviser bring to you and your family in the financial upheaval caused by the pandemic? Was an ample emergency fund in place at a planner’s urging? Did your investment adviser design a retirement portfolio that weathered the stock market decline in good shape?
Send kudos to the planner or adviser who made a positive difference. For the non-difference makers, figure out what’s lacking and either ask for it or seek it elsewhere.
GRADE YOUR FINANCIAL SERVICE PROVIDERS
In assessing our relationships with companies of all types, it’s time to consider their conduct and responsiveness in the pandemic. For example, did your car insurance company rebate some of its profit windfall from people driving less and thus not crashing into things as much? Did your bank have your back when you asked to defer mortgage, loan or credit card payments?
CONSIDER THE LIFE-CHANGING SAVINGS FROM WORKING AT HOME
Working at home instead of commuting to work could turn out to be the biggest money-saving opportunity of your lifetime. As discussed in Pandemic Personal Finance Update No. 8, you could go down to one car from two in your household and easily save $1,000 a month. You can also save by not buying your lunch, by spending less on work clothes.
Even working at home part-time can save you money. Start figuring out how much and all the good you can do for your finances with that money.
CLEAR YOUR MIND OF STOCK MARKET PANIC
Stocks crashed in March and surged back in April and May. You’re probably down for the year still, but the damage has gone from catastrophic to merely disturbing. However much stocks are down, portfolios holding a mix of stocks and bonds are down significantly less.
Brace yourself for a potential second leg of stock market declines, but be mindful of how the April-May rally demonstrated the stock market’s resilience.
EVALUATE YOUR POINTS CARD AND REWARD PROGRAM STRATEGIES
In this pandemic-driven economic downturn, cashback rewards are more practical than travel points. The ability to turn points into free groceries (as with Air Miles cash miles, PC Optimum) is huge at a time when the supermarket appears to be one of the spots in the economy where inflation thrives.
PLAN FOR TRAVEL
Pandemic personal finance is a lot about shrinking your world – working at home, not going out to eat, socialize or explore. Travel, when it resumes, will bring some much-needed variety to our lives. Keep adding to your travel savings fund, or start one, and amuse yourself through the physical distancing still ahead by picking somewhere cool to visit.
TOP UP EMERGENCY SAVINGS WHERE POSSIBLE
The pandemic has highlighted the emergency fund as the foundation of household personal finance. If you’re saving money through physical distancing, at least some of it should end up in a savings account to protect against any economic upheaval to come. The stock market may be acting like the pandemic will come to a quick, clean end, but that’s by no means certain.
MASTER YOUR ANXIETY-DRIVEN BUYING OF STUFF
One of the interesting quirks of human behaviour we’ve seen in the pandemic is panic buying. It’s not just toilet paper. In a recent Young Money Adviser feature, a financial planner talks about how commonly she sees people overspending as a result of stress or panic.
Build resilience against financial setbacks by saving, not spending. A growing balance in your savings account offers more permanent satisfaction than an online splurge, though certainly less of a short-term buzz. I mean, let’s be honest about retail therapy. It’s a thing.
CONSIDER THE JOYS OF TRAVELLING LIGHTLY IN A FINANCIAL SENSE
Own less, owe less.
PERSONAL FINANCE COLUMNIST
The Globe and Mail, May 25, 2020