What Covid-19 has taught us about financial security planning

Marie-Helene Lanoix-Verreault - Mar 04, 2022
Child balancing on a ledge

After two years of this pandemic, I believe we’ve realized how external situations (that are out of our control) can affect us. We’ve learned how our modern ways are intertwined internationally and can be turned upside down. Sickness, death, lockdowns, chain disruption, uncertain markets and mental health are just some of the challenges Canadians have been facing these past years.

Life can be fragile and proper financial planning is a must. As a financial advisor, I know the importance on delivering well-tailored financial plans to all of my clients.

On a personal note, I know I’ve felt the impact of this pandemic the past few years. I have close friends and family that have been affected by Covid-19, I also know people facing the financial burdens or mental health issues from coping with the situation. We’ve all heard the expression “We’re all in the same boat” and my reply to that is “Yes, but not in the same storm!”

Everyone has had to fight their own fight, and face their own challenges. And, that’s my point here, I want to help you prepare based on your personal situation. 

Life is fragile, and so can be your finances. 

Let’s talk about the importance of financial planning and the perspective we’ve gained for the last two years. 

Emergency savings plan

Everyone should have an emergency savings plan. Emergency savings should represent three to six months for monthly obligations. If you have $2,000 worth of monthly obligations, you may want to try and have at least $6,000 saved. 

Some of my clients have never followed a budget, or a positive monthly cash flow approach due to their debt load. For these clients, discussing this with them is often uncomfortable. If you’re in this situation, I recommend saving a little bit from every pay (whatever you can budget). The idea is that these regular savings will eventually build that cushion. 

It’s also time to look at that debt load. Review it and identify the interest rate of each interest rate calculation of these debt (daily or monthly, based on current balance or higher balance since it’s been paid off). If you can potentially consolidate your debts and pay less interest, it may help pay it off faster.

The second aspect everyone should review is their insurance needs. Here are a few examples you may want to consider:

  • Life insurance: What happens financially if you die? What would be the financial implications your death would place on your family?
  • Critical illness and disability insurance: What happens if you get sick? Cancer, a stroke, a heart attack or even a long-term condition. How would you cover the associated cost to your recovery? Or what if it affects your ability to bring in an income? 

For these types of insurance, you may have some coverage through your employer or potential support through government programs. Or maybe you’re self-employed and potentially have no coverage at all. You should also know if your debts are covered in case of illness or death and if your debt protection has any limitations. Knowing the details that pertain to your personal situation, can help you plan better to weather the storm if it happens to you. 

I recommend that you sit down with a qualified insurance advisor to review insurances policies that would be best for you and your family. I say this because one day you should become ill, it may be too late to do this type of planning. It’s like home insurance: you need it before it catches on fire! Because that day, without coverage you and your family may have to navigate through it by yourselves. 

I want to help prevent you from being in this position!

Legal documents

The third thing that I must stress is the importance of preparing legal documents. Do you have a will or a power of attorney? Who will handle your affairs when you die or are unable to make decisions? Something as simple as having access to your banking account to pay your bills (if you’re incapable) can be complex, costly and lengthy. The cost to get the right to make decisions on your affairs while you are incapable could be in the thousand-dollar range instead of the hundred-dollar range when you can sign the dotted line. 

In a perfect world, your family and loved ones would know and respect your wishes but this isn’t a guarantee. Hiring a lawyer can help you minimize the risk of such a disagreement.

Let me help empower you!

The last two years have made us realize how quickly things can become out of our control. That’s why I want to help you get a plan in place so that you may feel better prepared. Contact me today!