Dealing with Your Finances during a COVID-19 Crisis

Handling personal finances during a pandemic can be a challenge, especially for people who lost their jobs or saw their income shrinking. As employment dropped by over a million between February and March, it is not surprising that according to a survey by Statistics Canada, more than 30 percent of workers are worried that they might lose their jobs. The pandemic already has a profound effect on the economy, and many wonder how long it will last and how deep it will be. In times of uncertainty, securing your personal finances can help you go back to normal in the aftermath and relieve stress and anxiety. Building an emergency budget, applying for government aid, and dealing with debt are some of the things to do to sail through the crisis.

Build an Emergency Budget

An emergency budget includes essential expenses such as groceries, housing, transportation, and medications. With stay-at-home orders and isolation, many of the non-essential expenses are significantly less, so this is a good time to create a financial cushion to weather the storm. If you are saving toward long-term goals or big purchases such as home renovation or buying a new vehicle, it is best to postpone and focus on building an emergency fund. You can try to reduce some of your fixed expenses as well by lowering your rent, using household appliances at night, and turning off the lights when you are not at home. Contact internet, cable, and cell phone services to check if they have cheaper plans you can switch to. For student and personal loans or credit cards, call your financial institution to check whether they can lower your interest rate. Unnecessary spending must go. This includes things like vacations, entertainment, clothing, and electronics.

Apply for Any Government Aid You Qualify for

The Canadian government introduced a number of economic measures to ease financial hardship and help businesses and households that are struggling financially during the pandemic. Persons not eligible for paid sick leave and staying home are entitled to receive up to $900 bi-weekly in the form of an Emergency Care Benefit. This measure is in place for a period of 15 weeks. Eligible categories include parents looking after children due to school closures, those with sick children, persons taking care of sick family members who tested positive for coronavirus, and those who were ordered to self-isolate or are quarantined or sick. Self-employed persons also qualify. Under the Covid-19 Response Plan, businesses have access to credit through the Business Credit Availability Program, under which they are offered loan guarantees and other types of financial support. Businesses operating in different sectors qualify, including tourism, exports, air transportation, and gas and oil. Support is also offered to businesses trying to avoid employee layoffs and includes the Temporary 10% Wage Subsidy and Canada Emergency Wage Subsidy which pays 75 percent of wages.

Manage Your Finances

To manage your personal finances successfully, it is important to detail your financial goals, whether it is changing careers, starting a family, or buying a new home. You may want to prioritize goals such as saving toward retirement over going on vacation in light of the ongoing pandemic. Once you have established priorities, it is time to create a budget and plan your expenses. List all sources of income that you currently have, for example, wages, salary, alimony, real estate, mutual funds, bonds, and stocks. Then add up all expenses, including rent or mortgage payments, loans, transportation, and groceries. By subtracting expenses from your total income, you will see where you stand. It is also a good idea to track how your income changed due to the coronavirus crisis to see whether it has a serious impact on your finances.

Look for Help if You Are in Debt

How to deal with debt depends on how much you owe, whether you have multiple outstanding balances, and what the repayment terms and interest rates are. Have a look at your credit report and compile a list of all debts, including due dates, monthly payments, rates, and outstanding balances. Track payment progress every few months. If you notice that you made little progress, it is time to look for help. Debt counseling is one option to consider if you feel overwhelmed and are struggling with credit. Contact a reputable agency to work with your creditors and come up with an agreement to repay your debts. Agencies typically need details such as your financial institution, income, outstanding balances, assets, and financial situation in general. Keep in mind that some agencies charge handling and set up fees. There are alternative solutions to look into, depending on your situation, including credit counseling, negotiating with loan providers, and bankruptcy.

Financial Support for Small Business Owners

If you are a small business owner currently experiencing difficulties, it pays to look into options for accessing financing under the Business Credit Availability Program. Non-for-profits and small businesses are eligible to apply for an interest-free loan called the Canada Emergency Business Account. SMEs and non-for-profits are eligible to receive up to $40,000, and those who repay a total of $30,000 can apply for forgiveness provided that the amount is paid in full before or on December 31,2022. Other options for small business owners are cash management advice and payment deferrals offered by banks. Under the BDC Co-Lending Program for SMEs, businesses apply for loans, as 20 percent of the amount is extended by their finance provider and 80 percent by the Business Development Bank of Canada. Principal postponements and working capital loans are also offered to help businesses impacted by the coronavirus crisis. Working capital loans come with no study fees, flexible repayment schedules, and lower rates. Businesses are eligible to apply for up to $2 million.

Take Care of Your Mental Health

Your mental health is as or even more important than your personal finances. Mental health help is offered to all Canadians who experience emotional pain or crisis or have suicidal thoughts. Crisis centres across Canada work to help people who feel confused or stressed, such centres being the Vancouver Island Crisis Society, Telephone Aid Line Kingston, Safe Haven Women’s Shelter Society.

The government also offers advice on how to deal with stress and anxiety in a crisis. In times of physical distancing, communication is important, and people are encouraged to talk to family members and friends through social media, video chats, phone calls, and email. It is also important to exercise, eat healthy and balanced meals, and worry less about things that you cannot control. If you need mental health help, you can call a registered psychologist or your primary healthcare provider. Other sources to look into include Crisis Services Canada, the Kids Help Phone, and Hope for Wellness Help Line. The Kids Help Phone offers emotional support to young people aged 5 – 29 while Crisis Services Canada offers support to all Canadians through crisis organizations and distress centres.