Canadian’s Post COVID-19 Financial Recovery Plan

COVID-19 has not ONLY decimated hard-working Canadian’s income and way of life; it has also unfortunately increased our level of consumer and commercial debt, payment 'holidays' have triggered declining credit scores and undoubtedly affected our human psyche.

We’ve been annihilated; we experienced mind-shattering social isolation and as much as we’re slowly coming out of it; we have to face the reality that we have a lot of work to do in order to ‘catch-up’ on missed opportunities, we have to re-ignite professional relationships; which we placed on pause; over the past six months.

If you have a job to go back too; consider yourself lucky; if you’re self-employed or ran your own business; the journey won’t be so easy as it will take time to regain and ramp up momentum.

However; we have to tip our hats to the Canadian Federal, Provincial and Municipal Governments for doing all they could do to save Canadian lives! It was hard work; it took patience and it was stressful, but we did it!

Fortunately; the Canadian Government stepped up with CERB; their version of Financial Assistance for its population; our Banks and Credit Unions allowed our Mortgages and Credit Cards to ‘freeze’ in time; deferring payments and last but not least; our utility companies; stepped up and allowed our day to day household expenses to; again; freeze in time; until they resume regular monthly billings.

As much as their decisions were well received and well appreciated; our climbing debt and deferred living expenses will be waiting for us, the minute the Government gives the all-clear and life goes back to normal. From speaking with colleagues and clients; the general consensus is we would have (per family) accumulated $25,000; $30,000 and for some; as much as $100,000 in deferred debt.

Whether we like it or not; we have to get back into a rhythmic routine and create a plan to slowly chip away, one month at a time; until we’ve paid off all our deferred debt. To be quite honest here; it's only so long; our banks; credit card and utility companies could have survived without cash flow. The last thing we need is for our Financial Institutions to be so negatively affected; that it trickled down to us!

So; our new reality is around us; the next question is; how do we deal with life ‘getting back to normality’? I recently had a conversation with one of my good friends and client who owes over $40,000 (mortgage/utilities) and as much as he knows he will receive leniency and time to pay them off; knows first-hand, his long term wealth accumulation and retirement plan will have to take a back seat for the next 2, 3 or 5 years.

As an Advisor; it's devastating to know; we (collectively) have to sacrifice our retirement goals over the next 2,3 or 5 years!

‘Rick’ (not his real name) asked to meet to discuss his options; what should we do first, second, third and I said; the very first action he needs to perform is to update his Financial Plan, which we jointly created 10 years ago.

You see; a Financial Plan in my humble opinion is probably the most important document a Canadian family needs; as it controls 100% of our financial lives; today, tomorrow and all the way thru retirement and beyond. Wills and POA’s are crucial docs; however; without the backbone of financial wellness and security; we won't have any assets to leave behind and won't need a POA if we fell ill.

Here is the number one reason Canadians will struggle to get back on their feet; we (as a population) do not have a plan. Less than 5% of Canadians have a written and structured Financial Plan and it’s no coincidence that ONLY 5% of the Canadian population will retire in total comfort; is there a correlation? You tell me...

Here is another alarming stat; less than 50% of Canadians own a Life Insurance policy? Are you seeing a trend? I am; however, this trend can be easily rectified...

Now; some financial institutions have their own version of a Financial Plan; however; after 30 years in this industry, I’ve personally tried and tested the more well-known brands and I can safely state, all proprietary financial planning software and or tools created by a Financial Institution is 100% Subjective; when a Financial Plan should be 100% Objective; a vast and significant difference.

Let’s focus on the alarming statistic; which stated that only 5% of Canadians have a written and structured Financial Plan; after all, aren’t we a first world nation with probably the strongest G8 country in the world; so, is this stat true? We dug a little for some answers…

Here are some of the reasons we’ve been able to ascertain as to why Canadians don’t have a plan; for some; they ‘think’ they have little or no savings; they ‘think’ they don’t earn enough money; some ‘think’ they can put it off until later (later never arrives) in life; for some they ‘think’ it’s too cumbersome and or too expensive. Fortunately; none of these reasons to ‘think’ the need for a Financial Plan is true!

Here is the good news; it’s quite the opposite! If I were to put an age as to when someone needs to create their first financial plan, it would be the year they got their first permanent job; or started their career; post high school, college or university; regardless of your starting income.

Question; if we don’t have a financial roadmap from our journey’s starting point to our final destination; how on earth will we get there? Canadians don’t have to take chances or gamble with their and or their family’s financial future. More importantly; what if, along the way; we had course interruptions; you know; life little hiccups and had to make course corrections? If there was no plan; what do we do?

Take it from me; you would be 100% lost; and may face challenges far greater than the financial ill effects of COVID-19. So; what’s the next step; for starters; you need to work with the Money Coaches at the Money Café; where you will be able to create a Financial Plan; via our software (Manage Your Money™) which will be navigated/assisted by YOU; making this plan 100% Objective and that’s our goal.

Manage Your Money™ will create a roadmap for you and your family and not only will it create your financial plan, it will identify all your financial strengths and financial weaknesses; however it does not stop there as it will provide you with a plan of action to overcome them.

It’s a well know fact; the Space Shuttle (when it flew) enroute to the International Space station had over 2,000 subtle course corrections and if the engineers at NASA did not pull the shuttle back into a straight line, they would have missed their destination!

Likewise; if we don’t catch financial loopholes and or pitfalls early, we too will face a future filled with uncertainty; leaving us vulnerable and exposed.

We might even be vulnerable enough to ignore our KYC and Risk Tolerance profiles in order to take shortcuts or take on unnecessary risks in an attempt to catch up. News Flash; we can make up wasted time, we have access to amazing investments; BUT we need a Financial Plan.

First word of caution; be aware of your financial status at all times and understand; there is no secrets to making money; the probability of winning the Lotto is 1 in 14 million; however, diligence and patience will deliver the rewards were trying to accomplish.

Before we conclude; I would like to do a bit of coaching; after all, the best way to deal with a crisis of any magnitude is to gain knowledge and then apply that learnt knowledge to improve your financial future.

Here are the six (6) steps of the Financial Planning Process.

Step 1: Determine Your Current Financial Situation (Perform a Cash Flow Analysis)

Step 2: Develop Your Financial Goals

Step 3: Identify Alternative Courses of Action

Step 4: Evaluate Alternatives…

1. Consider: Life Situation: Personal Values: Economic Factors
2. Access: Risk; Time Value of Money (Opportunity Costs)

Step 5: Create and Implement Your Financial Plan of Action

Step 6: Review and Revise the Financial Plan (in a timely manner)

So, how do you access Manage Your Money™?

First step; go to www.themoneycafe.ca and become a member; its 100% free. By the way, we will create your financial plan free of charge with one objective; that is; if you need to make financial adjustments or implement financial activities; you allow us to be the preferred advisors, who will execute your financial products.

We sincerely believe this is a fair course of action; as; we; after all, provided the tools to create your Financial Plan which identified and recognized your financial weaknesses...

If you need to have a further discussion; reach out to me at: riyadm@themoneycafe.ca and let’s have a conversation and determine if you’re a candidate for us to work with.

Keep in mind; we can ONLY work with 100 clients per month; so, to ensure you take that first step towards financial security and independence; don’t hesitate; do today as much as you can; as tomorrow may never come.

Cheers

Riyad K Mohammed FA; PWA; RMS (CEO - The Money Cafe Corp)

E: riyadm@themoneycafe.ca - W: www.themoneycafe.ca