7 tips for financial planning during an economic downturn

It’s natural to want to take stock of your finances during an economic downturn. You might have a lot on your mind right now: maybe you’re suddenly out of work or worried about how your retirement fund is performing. To ease some of the stress during challenging times, it’s a good idea to evaluate your financial wellbeing and adjust your financial plan to address your current situation.

If you’re unsure of where to start, we can help. We’ve put together our top seven tips for financial planning in uncertain times:

1. Re-evaluate your household budget

If you’re worried about money, a good first step is to look at your budget and see where you can make some tweaks to help you save. Your budget is personal: It reflects your financial situation and what you value most.

When your income changes, you’ll want to update your budget to reflect that change. And while your fixed costs will stay the same – like your mortgage or rent payments – you may want to look at areas where you can cut back. For example, if you’re spending more time at home these days, maybe you can cut back on your budget for restaurants and other forms of entertainment.

Even in tough financial times, it’s a good idea to keep a little space in your budget for things that might not be necessary, but do bring you joy. Maybe that’s carving out some money for a weekly takeout meal, or allocating some cash for an on-demand movie rental.

Having a little something to look forward to can help you stick to a tighter budget during difficult times.

2. Check on the state of your debt

Now is a good time to check on any debt you may be carrying and make a plan for the future. Since you’ve just taken a look at your budget, you’ll have a good sense of your cash flow – which will help you figure out whether you can still afford to make all your debt payments right now.

• Take a look at current interest rates: Check the interest rates on your debts, whether that’s your mortgage, credit card or personal loan. Since interest rates have dropped recently, it’s a good idea to see if the new rates might lower your loan payment amounts.

• Make a plan for paying back your debt: If you do have the cash flow to keep covering your debt payments, make a plan for paying them off. One method you may want to try is to focus on paying off your highest interest debts first, while just paying the minimum balance owing on smaller debts.

  • For example: If you have a credit card debt with a 19.99% interest rate and a line of credit with a 6% interest rate, you’d focus on paying as much of the credit card debt as you can afford each month until it’s completely paid off, while paying the minimum amount owing on your line of credit during that time.

• If you need help, request relief: If you feel like you can’t make your payments at this time, there are financial relief options available through your bank to support you.

3. Conduct a financial check-up

Much like the annual physical that you get at your doctor’s office, it’s a good idea to get a financial check-up on a regular basis. It’s especially smart to do a check-up during uncertain times, when your money situation may have changed.

Set aside time to review and audit your accounts. Are there any subscriptions you’re no longer using? Are you paying additional fees for any services you use? Now is the time to comb through your accounts and find out where you can cut down on costs.