A study at Angus-Reid demonstrated that 39% of individuals who responded do not have a financial plan once pandemic assistance programs end. The firm gathered 1,500 responses from Canadians.
The survey also revealed that one out of four Canadians have relied on income support from programs like the Canada Emergency Response Benefit (CERB) and Employment Insurance (EI). One out of ten Canadians reported that they used payment deferrals for car loans, mortgages, rent, credit cards and lines of credit to make ends meet during the COVID-19 crisis. About half of these individuals stated that they are confident they won’t need financial assistance once the government support programs have ended. On the other hand, 10% reported that they’ll turn to traditional borrowing when support ceases, such as bank loans, credit cards and family loans.
Angus Reid Institute is a non-profit organization that’s committed to independent research. The survey was commissioned by Credit Canada, a non-profit counselling service. “A lot of them said, ‘I’m okay right now and I’ll cross that bridge when I get there,” Keith Emery said, the Co-CEO of Credit Canada. “We really wanted to try and wake Canadians up to say you need to get a plan now.”
Emery believes that many Canadians on assistance programs may be delaying the process of creating a financial plan because tackling the issue brings on a lot of anxiety. “You’re going to feel better once you’ve sat down and you’ve put it down on paper and now you really understand what the challenge is before you,” Emery explained. “Often it might be a little bit less than you think it would be. You’re also going to have some steps to take now because that’s really going to be the key.”
Currently, Canada is offering the following programs for financial support during the pandemic:
- Canada Recovery Benefit (CRB)
- Canada Emergency Response Benefit (CERB)
- Employment Insurance (EI)
- Canada Recovery Sickness Benefit (CRSB)
- Canada Recovery Caregiving Benefit (CRCB)
- Special one-time, tax-free, non-reportable payment for persons with disabilities.
Unfortunately, these programs will not last forever. Canadians should begin planning for their financial future sooner rather than later to avoid hardship. Keith suggests building an emergency fund. If you have a surplus of money from income support programs or have excess money from payment deferrals, you should begin adding it to a savings account. Having as little as $500 set aside can go a long way if and when you run into financial roadblocks. Keith also suggests working on paying down debt as opposed to carrying it indefinitely without a plan.
If you find you don’t have a budget surplus or you do have one but it’s not enough to cover your debt payments or other obligations, then you need to either look at reducing your expenses or reducing your debt load,” Emery continued. “From there, you may need to get creative with finding new ways of dealing with income.
Creating a Financial Plan
Credit Canada is advising Canadians relying on financial support with an expiry date to develop a plan for when support runs out. If you’re currently on financial support and don’t have a plan for your future, it’s time to start devising a plan. Below is a list of items to consider when creating a plan for your financial future.
- Build an emergency fund.
- Create a budget.
- Eliminate unnecessary expenses.
- Spend your idle time taking opportunities to save, such as cooking at home and walking or biking instead of taking transportation.
- Ask vendors for temporary or permanent discounts for long term service and dedication.
- Renew outstanding debt for more favourable conditions.
- Ask for help from a trusted friend or family member.
- Consider a career change for steady or higher income.
- Find creative ways to bring in more money.
Finally, be sure to take care of yourself. The coronavirus pandemic has been stressful for every Canadian, whether it’s been financial or not. If you don’t take care of yourself, you won’t be able to take financial action when it matters the most.
Source: City News
Veronica Ott attended Western University for accounting and obtained her CPA shortly after. Veronica owns and operates her own writing business with a specialization in personal finance, accounting and business related content.