The Covid-19 pandemic is causing financial stress for most Canadians as they are seeing their income reduced or eliminated and they are wondering how they will be able to pay their bills.
All levels of government have implemented emergency response plans including financial support and many financial institutions have stepped up to help by allowing people to defer payments and avoid penalties. Here are some ways that you can reduce the financial impact of Covid-19.
The federal government started the $107 billion Covid-19 Emergency Economic Response Plan, with $52 billion direct support for employers and workers and $55 billion in tax deferrals for workers and businesses. Other financial assistance to families include:
- A one-time increase to the GST tax benefit and increases to the Canada Child Benefit.
- A six-month interest free moratorium on the repayment of student loans'
- A 25% reduction in minimum withdrawals from a RRIF and variable benefit payments under a RRSP to help reduce the impact of volatile markets on senior's retirement savings.
- There are additional benefits to Canadians available from their province and municipality and they should visit the relevant websites for more details.
- Financial institutions are offering deferrals of mortgages up to six months for some customers as well as loans and relief on credit card payments and interest.
What can Canadians do to help themselves financially during the pandemic?
- If you need to borrow money make sure that you consider the interest rates and how you will repay the loan, do not dig yourself too far into debt that it will be difficult to get out of once the pandemic is over.
- If you have to tap into your emergency funds do it strategically, maximize all income sources first, create a more stringent budget and spending plan then consider tapping into your savings if you need to. Always start with cash funds and TFSA's as you will not have to pay tax on that income and withdraw RRSP's on non-registered tax investments as a last resort.
- If you are still working making saving money a priority after you have covered your necessary expenses this will help you should your job become affected.
- Maximize help programs from utility companies that can include lower rates, deferred payments and flexible payment plans to assist residents and companies. Many cell phone providers have removed data caps on internet and data plans and waived countrywide long distance fees. They are also offering flexible payment plans.
- Consider which bills you can eliminate such as subscriptions to digital services or retailers, and monthly donations.
It is important to continually assess your financial situation and if you can make changes that will help you to be more prepared for the future.
From an article by Sophie Nichols Jones