Stress and uncertainty caused by the current crisis affect your mental, physical and financial health. How can you be prepared for any outcome? Plan and look ahead: this way, you can preserve your budget and your peace of mind.
According to recent surveys, 46% of Canadians say that the pandemic has had a detrimental effect on their personal finances, and approximately 47% believe that it will take over a year before they are back on their feet. In other words, the consequences of the crisis remind us of the importance of saving and regularly taking a look at our expenses.
The tips below will help you take a look at your budgeting habits and tackle difficult areas, whatever they may be.
This is the foundation and it is what will help you identify your expenses, your income and find the resources available to fund future savings. House, credit cards … review all your assets and liabilities, so you have a complete portrait of your situation, and identify the expenses that you could easily reduce or get rid of (various subscriptions, internet package, telephone, television, delivery services, etc.).
Reviewing your budget based on what is now being called “the new reality” is easier once your expenses and income are clearly identified. With this in mind, the Association coopérative d’économie familiale (ACEF) has made charts and tools (in French) that can be printed or downloaded available to the public to help you reorganize your financial plan.
We understand that the current climate is certainly not the most conducive to saving. Nevertheless, as soon as you can, put some money aside. Start with small amounts, and by watching your budget regularly, you will be able to increase them as you gain control over the situation.
Your priority will undoubtedly be paying off your debts and by the same logic, limiting your credit. If you absolutely must take on debt, find a low-interest loan. Note: for planning purposes, if you are receiving the Canada Emergency Response Benefit (CERB), remember that it is taxable and that you must thus put a certain amount aside for the next fiscal period.
You can save to guarantee financial security over the long term, but you can also build an emergency fund, which should - ideally - represent 3 to 6 months’ current expenses. A TFSA is usually the best way to make your money work for you while being able to withdraw it easily at any time without tax implications. If you must currently delve into your personal savings to meet an urgent need, start by using your TFSA.
Between your role as a caregiver, your work and your family life, you might not have the time or support necessary to reorganize your finances. To be adequately guided according to your current situation, your obligations and the development of the crisis, do not hesitate to contact your banking institution to make an appointment with a financial advisor.
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