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Social distancing, lockdowns and WFH compelled many of us to make big purchases and even bigger life changes. It’s time for a financial checkup.
If you bought a premium car, quit your job, started a business or split from your spouse—among other changes—in the past two years, chances are the pandemic made you do it.
COVID-19 probably also got you into TikTok, breadmaking and, likely, watching endless series online. (Any fellow Ozark fans out there?) But while these activities have taken little more than time and a few pantry ingredients, it’s worth revisiting the bigger financial and life decisions you made during the pandemic, now that life seems headed for some semblance of normalcy.
As Winston Churchill famously said, “Never let a good crisis go to waste.” Let’s look at some of the major life changes Canadians made during the pandemic, and how to build on—or fix the damage from—these decisions.
Breakups are hard any time. For couples who ended their relationship during COVID, the challenges were compounded by financial uncertainty and, in some cases, one or both partners losing their job.
Now is a good time to review your separation agreement to ensure it reflects both of your current financial situations and expenses. If your income changed in recent months, your agreement may have to be adjusted accordingly. If you have children and you and your ex-partner are both returning to the office, take childcare costs into account.
Having said that, evaluate the cost/benefit of reviewing the agreement. Legal battles can set you back even further.
I’ve heard stories of dating couples who decided that, since they were going to be in a bubble together, it made sense to get hitched or cohabitate. There’s a good chance that in their rush to do this, many of these couples didn’t have “the money talk”—a candid discussion about values, experiences and goals related to their personal finances. I can’t stress this enough. If you can’t talk about finances when you’re in love, imagine how ugly it could get when a relationship breaks down.
If you and your COVID sweetheart are still together and plan to build a life together, please have the money talk. Better yet, sit down with a financial advisor and map out a financial plan as a couple—and also as individuals.
It’s also important to agree to a household and personal spending budget (or plan, if either of you is averse to the idea of a budget) that aligns with your financial goals.
And did someone say pre-nup? A marriage agreement is critical if one or both of you have significant assets or even debt. At a minimum, draw up a cohabitation agreement to clarify the roles and responsibilities of each party going forward.
The pandemic pushed many Canadians to take stock of their lives and re-evaluate what mattered most to them. For many, this introspection resulted in a career move, such as a new job, career change or a switch from employment to entrepreneurship.
If you’re among the cohort of Canadians who changed employers during the pandemic, take the time now to analyze what this move means for your finances in the short, medium and long term.
How much did you gain—or give up—when you moved to your new job or started your own business? How has this decision affected your cash flow and ability to put money aside for investments or retirement?
If you haven’t rejigged your financial plan to reflect your new reality, don’t wait—do it now.
This story by @rubachwealth suggests we take stock of our pandemic money decisions. What's your biggest purchase regret from the last few years? https://t.co/9elJxhE4sD
— MoneySense (@MoneySense) August 4, 2022
You couldn’t travel, dine out or go to events during the pandemic, so you bought yourself a fancy fitness bike or upgraded an unusable den into a Zoom-worthy new office. But now that border restrictions have loosened up and you’re starting to plan your first post-COVID trip—or facing unexpected expenses—you may be feeling a bit of buyer’s remorse about your expensive pandemic purchases.
If you rarely use that fitness bike (let’s face it—many have turned into expensive drying racks), or you need cash more than you need an oak standing desk, it may make sense to put your new toy back on the market. Supply-chain issues have driven demand for items such as fitness gear, cars and boats, so there’s a good chance you’ll fetch a handsome price for yours.
As for renovations, if they’re not completed, you can still re-evaluate the upgrades. The idea that “I’m at home all the time and I deserve this” doesn’t have the same urgency nowadays, right? Consider taking cost-cutting measures, like opting for economical materials or skipping renovations that aren’t necessary or cost-effective. If the reno’s already done and you’re in some debt because of it, you could shop around for a lower interest rate—for example, credit options like a balance transfer credit card or a home equity line of credit (HELOC).
“COVID dogs” are a thing. During the pandemic, many of us—including me—adopted a new furry friend. I actually got two. I love them dearly, but they are not cheap! Pet owners need to budget for vet visits, vaccines, food, spaying/neutering, toys, beds, etc., which can add up to thousands of dollars per year. I also bought pet insurance for my dogs, which will be essential if our little bundles of fur require major surgeries. You may want to consider insurance for your own pet, if you haven’t looked into it.
Pandemic boredom and skyrocketing stock and crypto prices lured many novice investors into the markets. Some made money by making opportune trades, while others lost because they merely followed the herd. Chances are that many first-time investors learned some hard lessons along the way.
Meanwhile, experienced but busy investors suddenly had plenty of free time to check on their portfolios and research new opportunities—becoming more invested, so to speak.
As the market continues to fluctuate, investors of all experience levels should check their impulse to chase returns and focus on developing or refining a long-term investing strategy. They’ve experienced market gains and losses over the past two years, and now it’s time to build discipline.
The best way to do this? Get educated. Learn as much as you can about strategic investing and work with professionals who can help you grow your money in a way that aligns with your current realities, values and goals.
For some Canadians, the quiet times brought about by COVID were opportunities to take care of life’s financial basics, such as drawing up a will and an estate plan, ensuring they have adequate life insurance or creating an emergency fund. With fewer things to spend money on, many Canadians downsized their lives and, along with that change, streamlined their household budgets. Some of us took the opportunity to simplify our lives and go back to basics. Others finally took the time to sit down, organize our finances and create a financial plan.
If you’ve put off addressing these financial fundamentals, then I urge you to do something about it now—before life becomes too hectic again.
After more than two years of pandemic stress and restrictions, many Canadians are itching to enjoy the good life again—after all, we deserve it, right? A little self-indulgence is OK, but be careful about buying things that a) you don’t need, and b) you can’t afford.
To keep your spending in check, avoid impulse shopping and immediate gratification. Remember that having a long-term approach to your finances and financial decisions will reward you.
Right now, the economic outlook in Canada and around the world is not particularly rosy. With rising inflation and geopolitical instability, central banks and governments are trying to keep every ship afloat. You can’t control any of that personally, but you can control your own choices. Your actions (or inactions) will impact you directly, and you will have yourself to thank or blame—it’s up to you.
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