Financial planning has never been an easy task – especially for young professionals beginning their careers. As the COVID-19 pandemic continues to impact the market, planning for a financially stable future poses even more of a challenge.
For many young professionals, this is the first time experiencing a global financial crisis – and unfortunately, they don’t teach you how to prepare for this in school.
In light of this difficult time, our team put together a list of the best financial advice for young professionals dealing with uncertain markets.
Set Clear Financial Goals
Last month, our team discussed the importance of setting clear financial goals during uncertain times. The first step to achieving financial success and building financial security, your goals should be reflective of the current situation and how your life has been impacted by COVID-19. You should think about your future and how your money can be used to work towards improving life. Make sure your goals are SMART (specific, measurable, attainable, realistic and timely) and consider whether they are short, mid or long term goals.
Commit to Budgeting and Saving
Now, more than ever, it is important to save money. Creating and sticking to a monthly budget is one of the best ways to save money and cut back on unnecessary expenses. You should review your recent debit and credit card statements to see how you are currently spending your money and where you can cut back. For instance, overspending on food delivery services and online shopping have been common outcomes of the COVID-19 quarantine for young people. Although it can be easy to get caught up in overindulging during this time, it is important to budget your money and spend wisely. Before making any new purchases, ask yourself: Do I really need this? Will buying this bring me any closer to achieving my financial goals? – likely not.
You should also keep your credit card debt to a minimum. As mentioned in a previous post, racking up credit card debt is the most common misstep young people make. Many make the mistake of spending their entire monthly limit, but it is important to live below your means, especially during the current pandemic.
Pro tip: never spend more than 30 per cent of your credit card limit.
Start an Emergency Fund
An emergency fund is a sum of money saved to cover unexpected – but necessary – expenses. This may include unexpected medical expenses or a lack of income due to job loss. As the name implies, the fund is meant for emergencies only.
As the global pandemic continues, the world is in a state of emergency. We are currently living in a time of uncertainty as millions have experienced unexpected life events – especially job loss. With no clear end in sight, it is crucial to prepare for the unexpected and start an emergency fund. Once you create your monthly budget, you can analyze how much money to set aside for emergencies. Then, open up a high-interest savings account to store your money.
Apply for Government Financial Relief
Fortunately, The Government of Canada is taking action to support Canadians who are facing financial hardship as a result of the global pandemic. Below are some available options that may benefit young professionals:
Canada Emergency Response Benefit (CERB)
The Canada Emergency Response Benefit (CERB) is a taxable benefit of $500 per week for up to 16 weeks to provide income support for eligible workers who have lost their income due to COVID-19. Read more here.
Canada Emergency Student Benefit (CESB)
The Canada Emergency Student Benefit (CESB) is a benefit of $1,250 per month to students and recent graduates who are unable to work or find work due to reasons related to COVID-19. Read more here.
Employment Insurance (EI)
Employment Insurance (EI) provides temporary financial assistance for Canadians who have recently lost a job or are unable to work due to sickness or injury. Read more here.
We understand this is a difficult time financially, but The RaeLipskie Partnership is here to help.
If you want to learn more about working with us for financial planning to set yourself up for success, contact us today!