An expert's guide to managing your finances during COVID-19

All information was accurate at the time of publishing, however, due to the nature of this pandemic, things are changing rapidly and we encourage our readers to follow the most up-to-date resources. 

We recognize that this pandemic is an extremely difficult time of uncertainty, especially when it comes to finances. Whether you’re curious about the available benefits in Canada or what to do with your investments, we’ve got the answers. Personal finance author, Kelley Keehn, shared her top seven tips to financially surviving COVID-19 and answered some of the most commonly asked financial questions during an economic crisis. 

KNOW WHAT BENEFITS EXIST

With endless amounts of information available online, you might be wondering what actually applies to your current situation. There are a few provincial and federal benefits that you can apply for now, however, there are also ones that haven’t yet been opened up. The two main federal benefits are Employment insurance and the new Canada Emergency Response Benefit (CERB). 

Employment Insurance: The maximum benefit for E.I. is $573 per week. In order to claim benefits through E.I., you need to have lost your job through no fault of your own and worked insured hours for the last 52 weeks. There are also variables based on where you live. If you’re able to, apply as soon as you stop working. You can find out everything you need to know about eligibility and the application here.

CERB: The CERB provides a benefit of $2,000 a month for four months and applies to wage earners, as well as contract workers and self-employed individuals that would not otherwise be eligible for E.I. You must not have received income for 14 consecutive days within a four week period when you apply. At the time of writing this, the web portal for the application hasn’t been set up yet, however you can read more details here. CERB is paid through the Canada Revenue Agency, so visit their website and sign up for “My Account” in advance if this applies to you.

Other benefits include an increase to GST and the Child Care Benefit. However, if you haven’t filed your taxes recently, make sure you do so otherwise you won't be eligible for these. Also, if you think you’ll get a tax refund, try to file now rather than waiting until the extended June 1st deadline.

GET CASH IN YOUR HANDS NOW

If you’re wondering what you can do to put more cash in your hands right away, you’re not alone. A few things to consider are: Can you ask your landlord to allow you to defer your rent? Can you ask your employer to advance your pay? Can you defer utility bills to free up cash? Can you cut back on a subscription you’re not using?

If you’ve been saving monthly for your RRSP or TFSA and worry about your job or financial situation, it’s ok to pause those contributions until this situation smooths over. It might make sense to hold onto the dollars you have for the coming weeks or months before making more contributions.

WORK WITH YOUR BANK TO DEFER PAYMENTS IF YOU NEED TO

The big six banks announced that they would work with Canadians to defer mortgage payments for up to six months. Kelley advises staying away from this if it’s not a complete necessity as you’ll still have to carry a heavy amount of interest. If having the breathing room is something you and your family are desperate for, call your bank. Keep in mind that the deferrals are not forgiveness, and are only issued on a case by case basis. If you tried recently and have been told no, don’t be afraid to try again. Banks are huge organizations and some of their front-line staff might not have the latest information. They may even work with you to have your credit card and loan payments deferred within reason.

Regardless of a crisis, if you have a traditional mortgage with one of the big six banks and your mortgage isn’t in arrears, you can likely skip a payment without penalty per year. Using that to your advantage now could help you top up/fund your emergency account.

That being said, make sure to get all deferrals in writing. If you can’t, write down all of the details and email yourself a copy. Track important details such as who you spoke to, what exactly was agreed upon and what time/date it was. 

CHECK YOUR CREDIT OFTEN

If you’ve deferred payments, you’ll want to ensure that they’ve been officially registered as “deferred” and not considered a late payment. Equifax and TransUnion are both offering free credit reports online, however, keep in mind that it’s entirely up to your lender to report accurately and not the credit agency. If you’re making a deferral agreement with your lender, make sure to confirm that it will not hurt your credit score. Then, check your credit report to monitor the status of your payments each month. You can read more about this topic here. 

GET CREATIVE

Do you have any cash laying around the house that you’ve forgotten about? Perhaps you have money in your Pay Pal account? What about using your travel rewards to pay off some of your credit card bills? Try and think about assets you have that you can cash in on to take the weight off your financial stress. While it might not be a big number, every amount can make a difference. 

DON’T ACT ON EMOTIONS WHEN IT COMES TO INVESTMENTS

It’s absolutely natural to feel scared and worried about your investments and retirement when you’re watching massive swings of the stock market, especially when most of them are down. However, when we make it out of this crisis, the moves up will be swift. While it’s easier said than done, don’t act on emotion. If anyone tells you that they can time and predict the market (exactly when to sell and when to buy), they can’t. As Kelley told us, “It’s been said that an investment portfolio is like a bar of soap; the more you touch it, the smaller it becomes. You will get through this but if you’re super panicked, reach out to your investment advisor or professional financial planner.”

CONSIDER LAST RESORTS IF CRUCIAL 

There are two last resorts you can consider if necessary. You can cash in your RRSP or use a PayDay loan. However, it’s important to understand the cons of each before making a decision. For example, when you cash in your RRSP, you lose that contribution room forever and are taxed heavily. Tax is withheld right when you take it out and you may owe more next year because it counts as income. Additionally, if your investments are down, you also crystalize that loss. Check with your bank or Certified Financial Planner to see if there are any other options you can exercise before resorting to this one.

To stay up-to-date on how COVID-19 is impacting the financial world, as well as ask any money questions you have to get free advice, you can tune in to here.