Before COVID-19, the word “pandemic” was not something you would see or hear often. In fact, it sounds like a word you would only hear about in disaster movies. Sadly, the novel Coronavirus has brought the word “pandemic” to the forefront of people’s minds. As governments and health organizations continue to seek out a vaccine, many regular folks are struggling to find ways to protect their families and their finances.
Fortunately, there are ways to do both. Wearing masks, social distancing, and washing your hands regularly will greatly reduce the chance of contracting COVID-19. However, protecting yourself from the economic fallout of COVID-19 is not quite as simple. So, here are 5 ways you can protect your finances during a pandemic:
1. Seek Out Safety Net Programs
The Canadian government has dozens of programs to help people recover from hardships. If you’ve lost your job or had your pay reduced due to COVID-19, consider applying for government assistance. Additionally, rent and mortgage payments are two of the biggest expenses most families struggle to pay in difficult times. So, even if you can defer your payments for a few months, it could help you get your finances in order until the economy has had time to recover.
2. Consider Low-Risk Investments
While it’s not advisable to completely change your investment strategy during a crisis, your portfolio could benefit from rebalancing. Moving some of your funds into low-risk investments can deliver a consistent return without putting your capital at risk. Protecting your capital from market swings is especially important during a pandemic. There are plenty of low-risk investments such as savings bonds, CDs, or money market funds, however, taking into account the shaky waters of the markets, consulting with a robo-advisor can help you better understand your situation and pick the best investment strategies and opportunities suited for you.
3. Practice Smart Budgeting
The problem with a pandemic like COVID-19 is that no one knows exactly when (or if) it will end. It could be a cyclical illness like the flu or it could die out with the widespread use of a vaccine. Either way, we just don’t know how long it will last. This means that you have to budget as if the pandemic will not end any time soon. Even if you feel financially comfortable right now, you may not feel that way six months from now. Therefore, you should start cutting back on the non-essentials now so that you’re prepared if things take a turn for the worse.
4. Don’t Overextend Your Wallet
Everybody has expenses that they need to pay. That said, there are some smart financial strategies that don’t always work well during a pandemic. For example, paying more than the minimum on credit cards or other debt is usually advisable, but not when times are tough. Instead, set aside those additional funds for a rainy day. Having extra savings for emergencies is vital during a pandemic. Additionally, if you’ve lost your job, you have several options to manage your debt effectively.
5. Don’t Reduce Healthcare Spending
It’s easy to start making cuts to your budget and end up cutting too much. This is especially true when a pandemic is putting everyone’s health at risk. Though you should find ways to cut out non-essentials, you should never view your health as a non-essential. If you have a private healthcare plan, you should continue making your monthly payments. If you or a member of your family ends up getting sick, that insurance could literally save lives.
Nobody knows your finances better than you do. While the tips above should help protect your finances during a pandemic, you will also need to closely evaluate your specific circumstances. COVID-19 is affecting the economy worldwide, so remember that you’re not alone. For additional advice and resources to help you through these difficult times, consult the Government Response to Coronavirus Page.