Financial Friday #64: Pandemic a Harsh Reminder of Personal Finance Basics

Pandemic a Harsh Reminder of Personal Finance Basics

It's a tough pill to swallow, but we have to acknowledge that the pandemic has exerted a few positive influences on our financial decision making and planning. The financial behaviours below were brought to the forefront by the pandemic and are all good ideas, so it will be interesting to see if they remain top of mind or fade away as the pandemic subsides.

Re-evaluating debt load
It is estimated that one out of every six mortgage holders deferred at least one payment since the pandemic began. Several credit cards providers also offered payment deferral programs to the 30% of Canadians who carry a balance on their card month-to-month.

While these programs helped avert insolvency for some, it remains to be seen if the pandemic has scared many into lowering their debt level – the current surge in new home prices would suggest not!

Rethinking needs versus wants
Whether it was due to reduced income or because many things simply weren't available, we were all forced to give up things we once viewed as needs. Gym memberships, movies, travel, dining out - they all went out the window!

Are these things going to come back into your life at the same level as before, or has your perceived need (and cash outflow) been permanently altered? If social media is any indication, many of us seem content to recreate our favourite restaurant meals and gym workouts without leaving the confines of home!

Saving money
If you were fortunate enough to maintain your income during the pandemic, you are not alone if you have managed to hang on to a lot more of it. Statistics Canada reported an all-time high savings rate during the second quarter of 2020, and it remains high to this day.

Only time will tell if there has been a permanent shift towards a higher savings rate, or are Canadians soon going to return to their spendthrift, pre-pandemic ways?

Escaping the paycheque-to-paycheque lifestyle
Around 50% of us live this way and we know, escaping from it is hard, but the pandemic has put a lot more focus on building up an emergency fund for unforeseen future calamities.

Many of us benefited from government COVID relief programs (CERB, CRSB, CEWS, etc.). However, we were also reminded that these programs provide only temporary and/or partial relief, and we need to be more prepared to survive on our own.

Reconfirming investment timeline and strategy
Investors ran for the exits when the panic started and many re-entered at much higher valuations when the dust finally settled. Markets have now surged well beyond pre-pandemic levels and those who did nothing seemed to have come up way ahead of the game.

Although robo-advisors and index funds may make investors more passive and keep them focused on the long term, will they continue to steer that course when the next big selloff comes along?

It’s unfortunate that it took a global catastrophe to reinforce many of the basic financial principles that we should be following every day, not just when a pandemic is raging outside the door.

In fact, all of the above mentioned factors form an integral part of our Wealth Mastery program. Why not check out an upcoming introductory webinar to learn more about it? It could help you secure your financial future once and for all!


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About 30% of Canadians carry a balance from month-to-month and it should top your hit list if you are serious about getting your finances under control. Tips like budgeting and cutting expenses are no-brainers, but others like balance transfer promotions are also explored in this article from MoneySense.

18 Places to call home for less than the national average
It might not mean much when the national home price is pushing $700K, but if you absolutely need to own a home and location is not top of your wish list, there is still hope in these cities and towns.

Developing the right mindset for successful investing
As this week's article mentioned, many investors cashed out of the market when COVID rattled the markets in 2020 and they had to buy back in at much higher valuations. Check out this article for how to cultivate the knowledge and discipline required to ride out the next big selloff.

Is Canada's obsession with home ownership healthy?
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Why should investors be worried about inflation?
Warren Buffet spells it out in simple English that anyone can understand, and chimes in with a few stock plays to hedge against rising prices.