Staying focused: How to manage financial anxiety

When financial turmoil is created by job loss and the global economy crashing around us, it takes financial anxiety to a new level.

No one could have seen the COVID-19 pandemic coming and very few of us are immune to being concerned. Even those who have stable jobs are concerned about potential layoffs, and what that could mean for them and their families. This, coupled with the sinking value of investments can cause feelings of insecurity and anxiety.

According to a recent survey by Borrowell :

  • 74% of Canadians are stressed as a result of the pandemic
  • Over 40% indicate their biggest financial worry is how to pay for necessities like food and rent
  • 32% report they don’t have a plan in place if funds run too low to pay their bills
  • 53% of respondents to a Conference Board of Canada survey said they expected their job prospects to worsen
  • Economists predict an unemployment rate of around 20%

Of all the things we’re worried about during this crisis, our personal finances top the list. 

What to do?

For many Canadians, the main source of anxiety stems from worry about their financial situation, ability to cover expenses, uncertainty about job or job prospects, and the ability to save and invest for future consumption or retirement. Those who in normal circumstances were comfortable are now feeling exposed. And those who were already highly leveraged are feeling the pinch.

Unfortunately there is no silver bullet, no magic investment product or strategy that will reverse financial fortunes and remove the anxiety many of us are feeling. So, what can we do? As the old saying goes: fix the things you can control, don’t worry about the things you can’t. This is great advice for our times and applies directly to our COVID-19 financially anxious era.

Specifically, here is what we advise:

Educate yourself: Understand what’s really going on. We are bombarded by media coverage, investment management updates, prognostications by those with a vested interest, and fake news. Some of which may apply to you, and some might not. Do your homework and understand what matters and what doesn’t.

Assess your personal situation and your options:  Just because markets are down 20% doesn’t mean you are. The impact of the crisis now and in the future depends a lot on personal factors; your age, whether you are employed, own a home, where your money is invested, and if you have children.

The impact and the strategies to protect you or capitalize on opportunity will vary greatly for someone close to retirement versus someone just out of school.

Create, build or revisit your plan: This is the part you can control. Make sure you are in the right investment vehicles to protect your finances (TFSA, RRSP, other). Are you set-up to access the new government benefits, do you have a budget and know how you’ll amend it if your situation changes? This is where non-biased advice and great tools can help.

Taking action on the things within your control will help you combat the anxiety around your finances in these uncertain times. The objective of this three part series is to offer guidance, and provide the tools to help you get started on your path to peace of mind. In part two, we’ll discuss your workplace retirement plan and provide some crucial dos and don’ts around investments.

Written by Joseph De Dominicis, Senior Vice President, Group Retirement Solutions and Salina Shariff, Senior Manager, Group Retirement Solutions at People Corporation.