COVID-19 & Financial Support: What you need to know

May 1, 2020

The COVID-19 global pandemic has created financial hardships for which many Canadians were unprepared. Here is what you need to know to stay afloat during these unpredictable times.

Federal Government Assistance

The Canadian government has taken swift action to offer aid to those affected by quarantine procedures. Here are some of the programs available and how you can access them.

Canada Emergency Response Benefit (CERB)

The CERB will provide $2,000 per month for 4 months to those who have lost their jobs, are sick, quarantined, or taking care of someone with COVID-19, plus parents who must stay at home without pay to care for children who are sick or at home due to school and daycare closures. Anyone who qualifies can easily apply through the My Service Canada website.

Employment Insurance

Accessing EI benefits is now easier than ever, with waiting periods and medical certificate requirements waived. If you have already applied for EI, there is no need to apply for the CERB – your application will be automatically assessed to see if you qualify for CERB.

Temporary salary top-up for low-income essential workers

For those deemed essential in the fight against COVID-19, the federal government will be working with provinces and territories to top up the salaries of those who earn less than $2,500/month on a full-time basis. Details have yet to be released, but this could provide a much needed boost to those on the front line, and the low-income workers who stimulate the economy (through spending) the most.

Canada Child Benefit

The payment amounts for the CCB are being increased to $300 per child for 2019-2020. Those who already receive the CCB do not need to apply – this is an automatic adjustment. Learn more about the CCB increase here.

Goods and Services Tax credit

By early May, a one-time special payment will be automatically distributed to low- and modest-income families through the Goods and Services Tax credit. For single individuals, this will be close to $400, and close to $600 for couples. This will be automatically distributed to all eligible Canadians.

Student Loan Payment Deferral

The government is deferring all student loan payments until the end of September 2020, during which time the loans will not accrue interest. There is no action required on your part – automatic withdrawals will be stopped, and those paying by cheque or other means are not required to make payments.

Deferred tax filing

Individual 2019 tax returns are now required to be filed by June 1, 2020, and the payment deadline has extended to September 1, 2020. See the CRA website for more information and other tax filing deadlines.

Click here to see the full federal Economic Response Plan and the most up-to-date information about the help available. Check out your provincial website for additional information about assistance programs.

Money-Saving & Cash Flow-Increasing Tips

STAY CALM

If you are investing, STICK TO YOUR PLAN. The market fluctuates, and it is always better to sell high and buy low (not the other way around). If you are not investing, now is not the time to become a day-trader. If you haven’t already, consider opening a TFSA and/or RRSP. Maxing out those contributions will give you tax advantages, and you get to keep the dividends that come from the policy. Talk to your financial advisor for an assessment of your needs and personalized advice.

Look where you can save

Is your bank offering mortgage payment deferrals? Can you cancel or reduce payments on certain services, or temporarily halt RRSP, TFSA, and RESP contributions? When was the last time you looked realistically at your spending habits? We are all experiencing difficulties right now, and help is available! The magic word to get assistance from financial institutions is “coronavirus”. Some utilities will allow you to make reduced payments for a set amount of time – for example, Hydro companies do this quite often in the winter when heating bills are high.

Do household inventory

Take a good look at your pantry and cleaning supplies, and figure out how long it will all last you. Only then can you make the grocery trip (once a week, maximum!). Knowing what you already have means you will be less likely to panic-buy and hoard things you don’t need. In addition, PLAN your shopping trips. Make a list and stick to it, preferably in order of the aisles you will traverse, so you aren’t wandering the shelves and accumulating things you don’t need.

File your taxes (or don’t just yet)

Is your income such that you’ll receive a tax return? Filing your taxes online through NETFILE software and setting up direct deposit can be a quick way of getting some cash on hand. Otherwise, take advantage of the deferred tax filing and payment deadlines.

Sleep on it

Avoid making expensive impulse purchases by waiting 24 hours before hitting “checkout” on non-essential items. This is great for online shopping, where you can leave items in your cart and come back to them later.

Take advantage of free content

You can easily cut back on your entertainment spending by checking out what your local library has to offer! While most physical branches are closed during the social distancing measures, many libraries have tons of digital content available. Visit your library website to see what they have available for movies, music, audiobooks, and more. Kanopy is a free service available through your library which offers access to lots of movies, shows, documentaries, and educational content. Libby is a free alternative to Audible which offers audiobooks for free through your library card.

Analyze your spending habits

Some banking apps offer the option to track what sorts of things you spend your money on. It can be humbling to see the total dollar amount spent on restaurants instead of eating at home, or on impulsive online purchases. With all of the facts laid out, you can more easily discipline your spending – make the commitment to order in once less per month, or to do weekly meal prep with your groceries so that healthy meals are available when you get hungry.

Planning Ahead

 

The best time to plant a tree was twenty years ago. The second-best time is now. – Chinese Proverb

While it may be too late for some of these suggestions to help right now, you shouldn’t let it stop you from beginning to take control of your financial future. Here are some tips for preparing for an emergency.

Emergency fund: how much do I need?

You should try to save for a 3 to 6 month financial crisis. Tally up your monthly expenses, and multiply the total amount by the number of months for which you want to save. These expenses should be the ones which are difficult to change, such as rent or mortgage payments, loan payments, insurance premiums, food, and utilities. You will likely be cutting back on some expenses in a financial emergency. Things like vacations, entertainment, dining out, retirement or education savings, or other goals are all things that can be put on hold during these times. You can use our sample budget sheet to get an idea of how much you should be saving.

Where should I keep my emergency fund?

Consider investments called “cash equivalents” so you have quick access to your emergency fund, but can keep it separate from your regular spending money, so you’re not tempted to use it outside of an emergency. For example, a high-interest savings account, GIC, money market funds, or TFSA. Be careful not to put your money into accounts that penalize and charge you for withdrawals.

How do I build my emergency fund?

Saving a small amount on a regular basis can help gradually increase your savings. Consider an automatic transfer of a set amount on each pay day and stick to your savings  goals. This can be treated like another regular bill that must be paid each month, or like a sort of insurance premium that you pay to your future self.

Being prepared for the unexpected

While most prefer not to think about their mortality or the possibility of being incapacitated, it is important to be proactive about one’s future. You can use our free Estate Planning toolkit to begin making a package which communicates your plans and wishes to trusted individuals. It is wise to discuss the contents in person as well, and find people who are close to you who can carry out your wishes in the event that you are no longer able to manage your own finances.

Support system

Having a financial safety net is always a good idea – but don’t neglect your mental health as well! Having access to healthy coping mechanisms can help ease the strain of going through financial hardship. It is a good idea to have a support network of family members and close friends who can offer assistance and emotional support. Services like BetterHelp offer online and text counselling, or if you already have a regular therapist, they may be willing to offer a sliding pay scale or deferred payment while you go through difficult times. Having a financial advisor can help keep you on track with your finances and ease the burden of handling it yourself, and will act in your best interests to keep you afloat.

Insurance

One good way to be prepared is to get insured! Critical Illness and Disability insurance are often overlooked – but they can be a big help when dealing with the unexpected. They can often be bundled with life insurance or group benefits packages, with a waiver of premium option so you get your money back if you don’t fall ill within a set amount of time. If your greatest asset right now is your ability to work and earn money, then this is the ideal safety net.

Being aware

While no one person can follow all the news in the world, it is a good idea to keep informed about what is going on in your community. Taking extra precautions during flu season (and getting vaccinated!) can help keep you and others healthier in the long run. Watch for local elections and see what policies are put in place to protect those who are vulnerable – anyone can become ill or disabled at any time, so make sure those in charge will help you when it matters most. You can also keep an eye on stores and restaurants you frequent, or companies where you may want to work, to see how they’ve helped their employees during the current COVID-19 crisis.

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