What to do with your pandemic savings

COVID-19 has impacted us all financially in one way or another. Although income remained steady through the pandemic for some, too many experienced a decrease or elimination of income due to business closures. There were, however, the lucky few who actually faired better being on government support like the CERB, CRB or EI than the wages they were making pre-covid.  Regardless of the income situation, most Canadians less spent on travel, gas, clothing and eating out. As a result, Canadians have managed to save like never before! In 2020, it’s estimated Canadians spent $4000 less than in previous years.  In fact, the Bank of Canada believes that Canadians have saved $180 billion in 2020!  But let’s don’t go all optimistic and crazy with that money. What to do with all these savings requires some soul searching and discipline.

Historically, when a fearful period ends, consumer spending increases. Following the Great Depression and the Second World War, spending increased to pre-depression and pre-war levels very quickly. We are already seeing an increased demand for many consumer items. Pools, hot tubs and backyard renovations seem to be trending again. The cost of lumber alone is thought to have tripled in some cities in Canada. Sales of recreational equipment like motorcycles, bicycles and ski-doo’s have escalated and supply is limited even at a higher price tag. Travel planning has commenced again with nearly two-thirds of Canadians planning a trip in the next six months. With the optimism of vaccines, experts suggest that spending will increase past pre-pandemic levels. 

While living for the moment sounds tempting, there will be a tomorrow. Maybe there is a better use for the savings that Canadians have accumulated. After all, the pandemic gave Canadians a new perspective on their finances showing them saving can happen if a change occurs. Maybe this is the time to make big changes in your financial future.

Renovating your home will enhance your current living environment and hopefully add value to your home, but if you are in debt, paying it off as soon as possible should be your priority. High-interest credit cards can take decades to pay off with the revolving interest.  Put your savings to work to create a better, debt-free future, for yourself and your family by using your savings to pay down debt.

If you don’t have enough savings to pay off the debt in full, you may be thinking your savings won’t put a dent into the debt so why bother. You are wrong. There is a legal debt option called a “consumer proposal” that may be perfect for you.  A consumer proposal is a deal you make with your creditors to pay all or a portion of your debt off interest-free and stop all collections. If you have a lump sum from savings, creditors would prefer it than to take payments over years.  A consumer proposal could solve your debt problems once and for all. What a great use of the money you saved during a very difficult year. Talk about a year of change!

Invest in yourself and take proactive steps to better your finances and pay down debts today. To learn more, contact us at mydebtfix.ca