Are you feeling stressed about your financial situation amid this Covid-19 pandemic? We are too. We want you to know that we are thinking of you and we want to help, which is why we’ve put together these 5 tips to help you save money during this difficult time. With all of us wishfully practicing social distancing, our workflow and incoming funds may be slowing, our attention shifting more to our home life and families and undoubtedly – our anxiety heightening. Finances are becoming another focal point. Spending choices become a little more serious (if they weren’t already) and enter some potential new rules around money management and budgets.
With all of the change we have experienced, this is a great time for us to revisit our budgets, and/or create a budget if you do not already have one in place.
- To create a budget, it is important to start off with an “income” section, in order to document all of your income sources.
- Next, you will want to create the following “expense” sections; 1. House expenses (this will include things like mortgage/rent, property taxes, utilities, insurance, etc.), 2. Transportation costs (car payment, bus/train pass, fuel, insurance, etc.) 3. Health (food, insurance, pets, memberships, personal care, etc.) 4. Other (this would include things like non-essential expenses, charitable giving, savings, etc.
- THEN you will take the income coming in and subtract the total expenses. If you are in the positive you might want to look at taking the extra money and paying down your highest interest debts first, and if you do not have debts to pay off, then you might want to consider putting it aside into a savings account, or investment. If you are in the minus, that is ok, it just means that you will need to take a look at your expenses to see what can be reduced or removed. Or it may mean looking at ways to increase your income.
While doing a budget is quite useful in setting financial goals, it is also important to compare your actual spending each month or even bi-weekly to your budget to ensure you are sticking to your plan, or to see where you might need to make adjustments to your budget. Budgets are helpful in giving you insight into your spending habits and to help you find ways to spend wisely, and to help you meet long term financial goals, especially during this time.
- Bank Account Fees
While we are all being asked to stay home and only go out for essentials, our debit card transactions have likely decreased. Now is a great time to look at the bank account plan you are paying for to possibly be able to save on your monthly bank account fees. Most banks and credit unions charge monthly fees based on the number of transactions you use on your account. The more transactions, the more your monthly fees tend to be. Most financial institutions allow you to change the type of account package plan you have to suit your transaction needs. Now is a great time to make an adjustment if you have seen your transaction numbers decrease, and hopefully save you some money by contacting your financial institution.
- Credit Card Interest
If you are someone like me who sometimes carries a balance on your credit card, this tip could be very helpful in saving you interest on that balance. Many financial institutions have stepped up and reduced the amount of interest they are charging people who carry a balance on their credit card, but there are other ways to save. Many of us have more than one credit card. If so, you might qualify for a balance of account transfer at a special/low rate. I would suggest calling your credit card companies to see what offers they currently have in place, and whether or not you would qualify for a balance of account transfer at a much lower rate. Be prepared for longer wait times than usual!
- Mortgage Payments
The big 6 banks in Canada have recently announced that they are stepping up to help people during this time with mortgage payment deferrals, which means that you might be eligible to defer principal and even interest payments for a period of time. In some cases you may still be responsible for at least covering the interest portion on your regular payment schedule, or may mean that you can defer both principal and interest payments for a period of time, although interest will still accumulate and all will need to be paid at a later date.
There may also be other options, especially if you have been paying your mortgage off faster than your actual amortization. This means that you may be able to take a mortgage vacation, or skip a payment, assuming you have paid lump sums or increased payments previously.
Additionally, because interest rates are at an all-time low, it might be a good time to revisit your mortgage rate. Many financial institutions offer what is called a “blend and extend” which allows you to lower your interest rate and potentially extend your rate hold period for a longer term or period of time!
Lastly, you may even want to look at using the equity in your home to pay off other debt. Mortgage or Home Equity Line of Credit refinances can be very helpful in reducing the overall interest you are currently paying on all of your debt and can even save cash flow (monthly payment obligations).
It is a great time to call or email your lender/mortgage representative to see if one of these options would be helpful in saving you money on your mortgage.
- Lines of Credit/Loans
Many people are not aware, but financial institutions may also offer interest only payments, and/or fixed payments to reduce your monthly payments. Lines of credit and consolidation loans may also be a way to pay off higher interest debt, especially if you do not have equity in your home, or you do not own a home.
Automobile companies are providing relief, offering deferred payment plans. If you have a loan or a lease payment on your vehicle, you should get in contact with the finance company and look into your options.
Car/Automobile insurance companies have also offered deferral payment options and are even providing discounts for people who are driving less due to Covid-19. Discounts may apply to home insurance policies as well. So it’s a good time to contact your insurance provider to reasess your options!
If you are in Canada and in need of financial relief during this time, you can visit the Canada Revenue Agency website and look into what options are available for you. This blog post is not sponsored and we truly hope that it helps!
Bonjour Bliss Team xo