Me Caroline Rhéaume, Avocate, M.fisc., TEP

Coronavirus: A time to review our approach to saving?

Whether we like it or not, the coronavirus has had a major impact on everyday life and we sometimes have the impression that a tsunami has passed through investment portfolios, taking all the gains in its path. We know that the stock markets will eventually recover, that people will be going back to work and that all is not lost. But what can we learn from this experience? Being a fitness addict and a boxing fan, I thought of an analogy between preparing for a fight and preparing in case of a difficult financial situation. Boxers must undergo extensive preparations and make many sacrifices to arrive on the day of the fight in their best physical and mental shape. Why not use their training as a source of inspiration when it comes to protecting your financial health?

Training camp = Savings

The training camp represents day-to-day savings, money invested in RRSPs, TFSAs, savings accounts, investment accounts. A boxer who does not train has very little chance to win the fight. If you do not make an effort to save money, a loss of income, an unexpected expense, can put you in a difficult financial situation. Having savings can eliminate or reduce stress when facing a situation like the coronavirus that forces many people to stay at home. Easier said than done you might think. Well, an easy way to do this is by paying yourself first. For example, you can set aside one hour of salary per day (or an amount equal to your hourly rate), or any other amount you choose, depending on your situation. What is important is to save on a regular basis. The TFSA can be a great investment tool as it is possible to withdraw the money invested, if necessary, and to pay it back the following year.

Nutrition = Choosing your investments carefully

Poor nutrition can lead to lack of energy, longer recovery time or even make you sick. Boxers often seek advice from nutrition experts to maintain a high level of energy and good health, despite all the training they are doing. Not taking the time to think about your goals, wanting to do it all by yourself, buying the flavour of the month, not taking the time to speak to a financial advisor or a financial planner are behaviours that can really make you sick when markets take a nosedive.

Strength and conditioning = Acquiring knowledge

A boxer, before arriving on the day of the fight, will not only polish his technical skills, do pad work and sparring. He will work on his speed, agility, power by doing strength training and boxing conditioning. Acquiring knowledge in any field generally allows us to feel more confident, to feel “stronger”. Acquiring knowledge about investments, even basic, will allow you to ask the right questions to the experts, to better understand their answers, and to feel in control. This will help you sooner or later.

Weigh-in = All the decisions, the sacrifices to build an emergency fund

To make weight on the day of the weigh-in, boxers must follow a strict diet and reduce their water intake, while continuing to train. They have to make choices, be very disciplined. To save money, you also have to make choices and have good discipline. You have to keep focused on your goals, not get discouraged.

Day of the Fight = Enjoy the money you saved

You might say that on the day of the fight, there will be a winner and a loser. Yes and no. Both boxers will benefit in some way, they will have more experience, and they will learn a little bit more about themselves. Few boxers leave the ring saying that they should never have invested so much time and energy getting ready for the fight. I do not remember anyone telling me that they regret saving money. A little is always better than nothing. Be proud of your accomplishments.

In conclusion

The bottom line is that you never know when you will need money. This can happen well before retirement and many people are currently realizing it. Being a top athlete requires strong self-discipline. Saving money often requires just as much. But remember that “success is the sum of small efforts, repeated day in and day out.”[1]

[1] Robert Collier.