Q: How should I rethink my financial strategy during these uncertain times?
AS THE REVERBERATIONS from COVID-19 continue to spread, it’s become clear how important our financial health is in addition to our physical health. Most of us didn’t budget for a pandemic, but it’s time to plan our money for the long term. We spoke with Nechelle Bartley, a Toronto-based financial strategist, about how to manage your finances, whether you’ve burned through your savings, you’re in deep debt or you’re worried about job security.
Still working
Even if you are comfortable with the amount of money you’re currently making, your standard savings probably aren’t enough. If there’s anything this pandemic has taught us, says Bartley, it’s the importance of increasing your contingency funds.
“Now is not the time to play small with your money,” she says. Whether you’re an employee or your own boss, you should realize your skills are valuable, and negotiate and ask for more. Don’t get too comfortable with the status quo, because that security could be taken away at any point.
Bartley says the pandemic offers a chance to look at whether you’re underearning and not charging enough. If there’s a promotion you could be pursuing or better employment elsewhere, go after it.
“This is an opportunity to reassess everything, not from the perspective of being fearful, but from realizing, ‘How do I want to move forward now?’ and thinking about whether you’re leaving money on the table when it comes to the value you provide.”
While times may be uncertain, some industries are doing well. If your company doesn’t have the budget to pay you more, they may have budget allocated to allow you to take courses and training that will make you more in the long term.
Depleting savings, making less
If this is your position, then your first step is making sure you’re able to take care of the essentials. The key is to deal with your current situation so you’re able to think about the future.
Focusing only on the depletion can become depressing and overwhelming. It’s important to have an open mindset so you can be prepared to pivot, says Bartley. She recommends thinking about your next move. Increasing your skill set may require a monetary investment, while other options might be free. “Don’t be resistant to the option of debt if necessary,” she says.
“If you’re a business owner, you may need to rescale or get more money to invest in something new. There are still people making a lot of money, even in a market like this.”
No savings, drowning in debt
In this situation, your priority is to make the minimum payments on your debt. This might mean eliminating anything you don’t need during the COVID-19 period — remember, you can always come back to it later. Your priorities are food, shelter and utilities. Child care? Clothing? Cable TV? If you don’t use it or need it, stop paying for it.
If you can’t make the minimum payments, it’s time to speak with your creditors. Creditors are willing to help, especially considering the amount of backing the governments have been giving banks, says Bartley. They can lower interest rates or payments for you, but you must be proactive about it.
People have a lot of guilt and shame around debt, and those feelings can lead you to inactivity. “But this isn’t the time to run and hide,” she says. “Do your part to show responsibility in continuing to pay it.”
Whether you feel you’re not making the amount you want or you’re not able to spend your money on what you want, everything can be adjusted — and nothing is permanent. “Not everybody has all the answers, and you’re not supposed to. This is where you have opportunities to ask for help and get guidance. There’s absolutely no shame in that.”