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Financial Wellness in Times of Crisis

“I’m sorry, but I brought you in here to tell you that we have to let you go”. As I heard these very unexpected words from my employer on a bright, sunny August day several years ago, my mind was flooded with emotions and confusion. Fortunately, the countless hours I’ve invested in learning from leaders such as John Maxwell, Stephen Covey, Simon Sinek and Dale Carnegie have taught me that every opportunity is surrounded by a problem. Because of this integral belief, as I lugged my box of personal belongings onto the elevator and gathered my thoughts, the question I asked myself was not ‘Why me?’. Instead, I wondered ‘What good thing is going to come out of this?’. And that is the question that I have during this current crisis we find ourselves in.

The COVID-19 pandemic has created the most unprecedented challenge in modern history. In the workplace, supporting our employee’s well-being has taken on a more urgent priority than ever before. It’s guaranteed that every single workplace has people who are dealing with challenges brought on by this crisis that are impacting their future. This is an opportunity for organizations to demonstrate true leadership by showing care for the physical, emotional and financial wellbeing of their employees. Show up for employees with compassion and a demonstration that the organizations is concerned for them, and they will show up for you.

In terms of financial wellness, the current landscape includes uncertainty about the future of our jobs, our companies and the economy. The reality is many Canadians who were already living paycheck to paycheck are now unsure how to cover their basic expenses. Living with debt and financial stress often creates a ripple effect of physical and mental unwellness that can negatively impact employee’s quality of life. These factors, if not addressed, will impede employee’s ability to bring their best selves to work.

The good news is that in the workplace, providing resources to employees that grows their financial literacy skills will build resilience that can serve them in this during this time of crisis and once the crisis has passed. This era of physical distancing has created an opportunity to take stock of our priorities. Many of us are taking advantage of having more time on our hands to level up our skills and knowledge with the objective of coming out of this better than when it started. It is a prime time for employers to provide meaningful tools and resources to employees to enhance their financial wellness and reduce their stress and anxiety.

Of course, in this climate it is necessary for resourcefulness when addressing wellness programs or employee training. In absence of a formal financial wellness program, there are many valuable, free resources that you can share with your employees to help them plan for the future to ensure they are in the best financial position possible.

Resources for Immediate Financial Need

For those in financial distress, there are several government-sponsored supports and other programs that are available to help individuals to get by during this time.

Your employees may be in a situation where they are having trouble paying for their expenses or they anticipate that will be an issue in the near future. During the COVID-19 crisis, the provincial and federal governments have put a number of income-replacement programs in place which may provide short-term relief, as follows:

Alberta support for employees

Federal Employment Insurance benefits

Utilities, water, waste and recycling bills are eligible for 90-day bill deferral. Contact your provider(s) by phone or through their website to arrange if you’re experiencing financial hardship.

Mortgages may be eligible for deferrals, which essentially allow you to skip payments for a defined period of time. Contact your mortgage lender to discuss payment deferral options. Be aware that deferring payments may increase your interest costs over the life of your mortgage, so it's important to carefully evaluate your financial situation and priorities before exercising this option.

Auto and personal loan payments may be eligible for skip-a-payment. Contact your bank or financial institution by phone or through their online services to discuss options.

Insurance premiums may be eligible for deferrals. Contact the advisor or financial planner who helps you with your life, disability, critical illness and any other individual insurance policy that you own.

Resources for Long Term Financial Outcomes

Uncertainty is one of the constants during this pandemic, and there is much that is outside of our control. One way of creating some certainty is by shifting our focus to the choices that we can make in the ways that we can respond to these challenges.

Cutting costs to manage cash flow

During this time of reduced or uncertain income, it’s critical to differentiate between essential expenses (needs) and discretionary expenses (wants) and limit spending on wants.

  • Needs will include rent/mortgage, utilities, groceries, supplies for children, medication, insurance, cellphone.

  • Wants will include cosmetics, video games, clothing, gym memberships, Skip the Dishes, alcohol, etc. For the average Canadian household, 25% of the income goes towards discretionary expenses. Reducing these expenses now will allow a buffer for emergencies.


Ways to reduce expenses:

  • Review subscriptions and cancel unnecessary, redundant or unused services.

  • Review home and auto insurance- check if they can be bundled for cost savings; if you haven’t shopped around in the last 2-3 years, now is a good time.

  • Ask your bank if they will reduce interest rates on any credit cards you have.

  • Avoid hoarding and panic buying. Only buy what is necessary.

  • Track spending for 2-3 months (review past bank/credit card statements) to find expense categories where you are overspending and make adjustments.

  • Reduce expenses diligently to avoid incurring new debt- this will pile on more stress and financial challenges.

Budget like a boss

A budget is the vehicle to help you keep on track to achieve the goals that you set. It creates awareness about where your money is actually going. Right now it can be painful to face how much money you have, or don’t have. It’s helpful to reframe this as a roadmap that enables you to take back a little slice of control and proactively stretch your dollars further than ever before. A budget assigns your money a job and establishes spending limits for specific expenses which puts you in control of your finances. This is not to suggest that a budget will fix a financial crisis overnight, but it will provide some peace of mind by providing some control.

Guide for making a budget

Budget Planner tool

Self-guided resources to upgrade financial literacy

Spending a few minutes a day learning about better money management and the building blocks of financial wellness is time well spent. These resources will get your self-motivated employees off on the right foot.

Free online videos offered by Ontario Securities Commission:

Free online, self-paced course taught by professors from McGill University:

Books:

Podcasts:

  • Choose FI by Jonathan Mendonsa & Brad Barrett

  • Afford Anything by Paula Pant

Expert advice:

  • Get Smarter About Money website

  • Consult with a Financial Planner or Financial Coach

  • Provide financial wellness webinars to educate employees about budgeting, debt reduction, ways to spend less, saving for short and long term goals, retirement planning

  • Financial tools, calculators and resources available through your organization’s retirement savings provider and EAP- consult with your benefits advisor to learn how to maximize these programs

We are all in this together and I am happy to support you through this unprecedented time. I am an employee benefits advisor and I work with organizations and individuals to protect what matters most- their people. Reach out for any questions about these resources or about your group benefits, retirement savings or wellness programs and how they can be leveraged during this crisis.