Was it really just a month or so ago that our world instantly changed? Transitions in life can be hard when you see them coming, let alone when they come completely out of the blue. And few, if any, foresaw the real threat to health that COVID-19 was and is. Now, the very steps that are being taken in an attempt to protect everyone’s health are causing significant financial stress and hardship for millions of people. The unfortunate result: there are far more people asking the question “Am I Okay?” today than there were just six short weeks ago.
While I often say “don’t let short term noise derail your long term plans”, sometimes what we have to deal with is more than simply noise – it is a crisis. In a crisis, sometimes we do have to focus on the here and now. In the context of this pandemic, if you are financially asking “Am I Okay”, it probably relates to income and will you have enough income to cover your expenses. Whether your household is dealing with the loss of a job or business income, maybe you’re retired and your investments have been impacted, or the financial strain is causing cracks in your marriage and you may be on your own soon, whatever the reason is, the Financial Transitionist Institute identifies two steps to a short-term cash flow plan to answer this question. Eventually a detailed cash flow plan will most likely be needed, and in time, a long term plan created, but for now this quick version will at least ease some of this anxiety and hopefully put your mind at ease that you will be okay, that there are ways to cover the bills and get you through the next 3-12 months.
Step 1: List Your Sources of Income - What and how much they are, the frequency you will receive it, and how long you can expect to receive it for. Remember to check for government benefits (Federal and Provincial), especially new programs due to COVID-19, apply for everything you qualify for.
Step 2: List Your Sources of Available Cash - List all sources you can access. This may include things like bank accounts, investments accounts, insurances policies, home equity, or even family. Make note of any penalties, taxes or other costs.
In light of today’s circumstances, in addition to the two-steps the Financial Transitionist Institute identifies, there is a third step we need to add. Nearly as good as newly identified sources of income, are expenses that can be reduced or deferred specifically because of COVID19. Things like mortgage payments, car payments or leases can be deferred, rent relief sought, and even expenses like auto insurance premiums reduced. Speak with your bank / lender, service provider or landlord for options available to you.
It is very important to not just identify these sources of income today and funds you can access, but to actually write them down. Once you can see them, you can make an action plan to get you through the next few months. Your financial advisor, especially if they have been trained in guiding clients through financial transitions, can certainly help you get through this crisis now, and eventually, when the time is right, help you forward. Remember, as the old adage says, and this too shall pass.