March 18, 2020

[Ep. 232] How to Be Smart with Your Money During the COVID-19 Pandemic with Janna Herron

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I’m Jessica and I’m a money expert, speaker, Accredited Financial Counsellor Canada®, host of the More Money Podcast, and am currently writing my first book with HarperCollins Canada (2025).
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This episode of the More Money Podcast is sponsored by UFile. Still haven’t filed your taxes? File your taxes online with ease by using UFile, and get 15% off MOMONEY.

So…it’s been a crazy few weeks (understatement of a lifetime)! I almost never do “timely” podcast episodes. I typically record all my episodes a few months or weeks in advance, so it’s hard to do an episode that is about what’s going on in the news and it still is fresh or on trend by the time it’s published. But, since what’s going on right now with COVID-19 and the stock market is something I have never seen or experienced before, I knew I needed to have an episode to talk about it.

That’s why I’ve got Janna Herron, Personal Finance Editor for Yahoo Finance, on the show today to discuss what exactly is happening, how we should react, and how best to manage our money in these uncertain times.

Here are some of her top tips which I completely agree with.

1. Don’t Panic

I know you’ve probably been hearing this a lot, but honestly, it’s the best advice you can take. I understand it’s easier said than done. I myself am trying not to panic. A lot has changed in my life and business in just the past few weeks, such as all my future speaking engagements have been canceled, so it’s hard not to panic and think the worst. But just remember, the best thing you can do is stay calm to maintain a clear head. When you let that panic take over, you’ll start to make emotional decisions that may not be the best choices for you in the long term.

2. Don’t Sell Off All Your Investments

Another piece of advice that’s easier said than done, but I would really implore you not to make a very rookie investing mistake which is selling off all your investments to free up cash because you’re panicked. I’ve even had thoughts of selling some things off or stopping some of my investments to have more cash on hand. That’s a natural feeling to have! Our instincts are telling us to cash out and run away from danger, but when it comes to long-term investments you cannot do this. This is the time to continue investing or if you can afford to, dump more money into your investments.

3. Free Up Cash Flow If You Need To

Now you may be thinking “What if I need cash though?” If you don’t have a fully funded emergency fund that can float you for 3-6 months if you lose work, then that’s obviously a different story. If you feel like your livelihood is at risk, then it’s important to have cash on hand. And by that, I don’t mean literally get cash out of the bank to put under your mattress (though there’s nothing wrong with having some physical cash at home). I mean that in order to prevent you from going into debt, you need to have the cash to pay for things if your income dries up. In this instance, there are a few things you can do.

  1. File your taxes. It’s tax season after all, and you may be due for a nice tax refund. Put those funds to good use by putting them into your emergency fund.
  2. Cut or pause any unnecessary subscriptions
  3. Cut back other unnecessary expenses, like eating out (this is actually the best time to start eating in and meal prepping).
  4. Call your lenders and creditors to see if they can reduce your regular debt payments temporarily.
  5. Contact your utility companies to see if they can reduce your payments temporarily.
  6. Sell things you don’t need if there’s a market for them.
  7. If you’ve always wanted to start an online at-home side hustle, this is the perfect time to start!

If you’re still worried about not having any cash, then either reduce your regular contributions to your investments, pause them (but don’t forget to restart them when you can afford to), or if you’re really desperate, liquid some of your investments (ideally from your TFSA or taxable accounts first, not your RRSP).
And if you need to borrow money, make it your last resort and avoid high-cost debt like credit cards and payday loans. Work with your bank to secure either a close-ended loan with set payments or a line of credit.

4. Don’t Be an Eager Yet Inexperienced Day Trader

Investing Foundations for Canadians Course

“Buy low, sell high!” Do you know how many times people have been messaging me with this quote? Yes, it’s true, right now is a great time to buy equities on sale, however, that doesn’t mean this is the time to become a day trader when you don’t know what you’re doing. Buying s

tocks can be risky, and there are a lot of emotions involved with trading. If you really want to start investing, great, but don’t just start buying individual stocks. Start by making an investment plan which will help guide you on what to do.
One way to get started would be to enroll in my Investing Foundations for Canadians course.

Interview with Warren Buffet

As I mentioned in this episode, Editor-in-Chief Andy Serwer interviewed Warren Buffet about his reaction to the stock market’s recent decline. You can watch and read the transcript of that interview on Yahoo Finance.

Follow Janna Herron

Janna is the personal finance editor for Yahoo Finance and Cashay, the company’s new personal finance hub. Check out more helpful articles and resources on both those websites, and make sure to follow Janna on Twitter!

Disclosure: Nothing on my website or affiliated channels should be considered advice or an endorsement, and some content may include affiliate links in which I may earn a commission at no extra cost to you. Please read my disclaimer to learn more.

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