Pack lunch, avoid eating out, practice frugality, advises bank
Tuesday, 30 December 2008, 03:32 Hrs
Toronto: As North America enters recession, a top Canadian bank has come out with a five-pronged blueprint for people to weather the economic meltdown, advising people to reduce spending, pay off debts and even avoid eating out every day. In a release here Monday, Scotiabank, which is Canada's second largest bank with operations in more than 50 countries, warned people against making emotional decisions about their financial future. "One way to avoid the trap of leaping before you look and making financial or investment decisions you will regret in the long run, is to manage stress by paying attention to your physical and emotional fitness," the bank said. "If you don't have a financial plan, now is the time to get one that emphasizes debt management and maps out your short and long term goals. Focusing on those goals will help you maintain perspective," it said. Asking people to pay down their debt on a priority basis, the bank said: "Start by tackling consumer debt such as higher rate department store and other credit cards. Inform yourself about interest rates and options, such as a consolidation loan, that will help you free up cash for other priorities such as investing or paying down your mortgage." "Strongly recommending reduction in spending so that more money can be redirected to debt repayment or savings, the bank said: "Review your household budget to track how much money is coming in, what your fixed expenses are and identify things you're spending money on that you could live without." Preaching frugality, the bank says: "Pack your lunch rather than eating out every day, cut back on magazine subscriptions or visit the library more often rather than buying books all the time." People should also open an automatic savings plan which gets the money straight from their bank account. It suggested additional contributions to RRSP (registered retirement savings plan) to claim refund which could be used to meet other needs such as paying down high-cost debt and mortgage. Looking to the future, the bank advises people to diversify their portfolio for recovery. "When markets are down, there are investment opportunities that can potentially benefit your portfolio in the long term. Be diversified with an appropriate mix of asset classes (equity, bonds and cash equivalents) that fit your risk tolerance, investment time horizon and income requirements," the bank says.