Learn Personal Finances During COVID-19 with Shannon Lee Simmons
Many of us are worried about our finances during COVID-19, and that's why financial expert Shannon Lee Simmons is giving an online talk with Regina Public Library to help people plan better.
The talk will go into details, but here’s how to survive through a (hopefully) short-term financial emergency like the COVID-19 pandemic, according to Simmons. The following tips are based on a 3-6 month emergency savings plan:
Step 1: Calculate what income will be coming in either through your work or from CERB/EI. This is the cornerstone of your plan. You can't make any other financial decision until you know what money is coming in.
Step 2: Reduce expenses as much as possible so you break even. Your goal is to try to stay out of debt. Look into reductions like student loan interest, reducing car insurance while you're not driving and other bills that could be reduced during this period of time to free up cash flow.
Step 3: Do your taxes. Ensure you apply for the extra benefits (i.e. CCB and GST boosts).
Step 4: If you have money saved: Start pulling money from non-invested cash, high interest savings accounts, and TFSA savings first. Don’t take money from your RRSP if you can help it. Put all of this cash into one savings account. This is like your security HOLDING TANK. If you have money saved but it’s invested, or you have no money saved: you need to decide whether accessing debt (like a line of credit) vs. selling off invested money in your TFSA or non-registered account (don’t take money from RRSP) is a better option.
Step 5: If you don't have money saved and you're not breaking even, you'll need to make a plan to go into debt safely. This is called a controlled burn. It means that you take exactly what you need – no more – each month and move it into your chequing account to pay for your life. We limit it this way to create the illusion of a steady pay cheque and budget within that, so that we don’t fall into the trap of taking on more debt or blowing through more cash than absolutely necessary.
Step 6: Make a plan to repay! If you’ve had to borrow from a form of debt, or from your tax savings, we will need to pay that back when all of this is over. It’s a good idea to try and ballpark a plan now, before you take on this debt – so that you have an idea of what you’re looking at in terms of a payback plan.
You can register for the event here, and we’ll send you a link to the Zoom meeting via email. It’s a perfect time to make financial lemonade. Hope to see you there!
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