How to Save Money, Depending on Your Current Pandemic Situation
Money expert Nechelle Bartley explains how to rethink your savings strategy during these uncertain times.
As COVID-19 continues to spread with no end in sight, 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, and as we’re in this for the long run, it’s time to plan our money for the long term.
We spoke with Nechelle Bartley, a Toronto-based financial strategist with Money Basics, 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.
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 under-earning 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. If so, what are you going to do about it?”
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.
Whether your income is government assistance or you’re dipping into your savings, 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, whether it’s training or exploring something different. 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,” says Bartley.
“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 and making new opportunities, even in a market like this.”
(Related: 3 Smart Ways to Manage Your Money Better)
No savings, drowning in debt
In this situation, your priority is to be able to make the minimum payments. This might mean looking at your finances and 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. Prioritize your spending on what you need.
If you can’t make the minimum payments, it’s time to speak with your creditors. Creditors are understanding and 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 the point of inactivity. “But this isn’t the time to run and hide,” she says. “You still need to take care of the essentials, and you may be utilizing debt to do that. This is an unprecedented situation, but 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.”
Nechelle Bartley is a certified financial planner and a Project Management Professional with Money Basics.
Next, learn the money lesson we all should take away from 2020.