Here are 5 useful tips on managing your finances during a crisis
Rework your budget according to your new reality
Recently your revenues have perhaps fallen. Your expenses as well. You’ve stopped certain activities (going out to a restaurant or to see a film). Certain services have been interrupted (day care, for example). As for the price of gas, it has fallen.
More than ever, this is the time to update your budget. Fortunately, there are online tools to help simplify the task.
Are your revenues and expenses still in balance? If so, continue being vigilant. If not, try and figure out if some adjustments can be made.
In periods of instability, the priority must be essential expenses. Avoid all unnecessary expenses, for example, unneeded online purchases.
Pay your debts with the highest interest rates first
Of all the payments you have to make, which ones have the highest interest rates? Probably the unpaid balances on your credit cards. So if you have to choose which debts to pay off first, start with those.
Why? Because credit card debts are the most costly in terms of interest rates and penalties.
Ideally, pay off your entire monthly balance before the due date. If things are too tight to do that, pay the minimum required. It’s not ideal but it’s better than nothing.
Try and put off certain payments
Mortgage payments can really weigh you down when revenues are lacking. Fortunately, in the current context, Canadian banks have confirmed that they are ready to help their clients in difficulty, on a case by case basis.
If you think that you may not be able to make your mortgage payment soon, call your bank. Together, you can look at the possibility of negotiating, slowing or putting off future payments.
Do the same thing with whoever may be financing your car.
Keep informed about government aid programs
Over the last week, federal and provincial governments have created special programs to lend a hand to those financially affected by the pandemic.
Take a look at the Temporary Aid for Workers Program from the government of Quebec. Also keep informed about Canada’s COVID-19 Economic Response Plan: Support for Canadians and Businesses. Some the proposed measures could help ease financial pressures to some degree. Most important, keep up to date, because other announcements are sure to come.
Please also note: the due date for tax returns has been pushed back to June 1, 2020. But if you think you’re likely to receive an income tax refund this year, don’t wait! The sooner you send in your tax return, the quicker you’ll get the money you are owed.
Beware of miracle solutions
When we start to panic, the urge to look for “magic” solutions can be very tempting. Be careful.
For example, “quick” loans are very risky. Their interest rates and penalties are very high (often 29% and even more!). Even if you borrow just a small amount, it’s easy to get deep in debt.
And is borrowing from your friends and family truly a good idea? It depends. There are pros and cons to consider. First, ask yourself this question: am I really going to be able to pay back my friends or family? If the answer is “no”, think about how this could harm your relationships. Being over-indebted isn’t easy. But it would be a shame to further complicate the situation by involving the people you love the most.
If you need help, we’re just a phone call away.
Speak to a counsellor without having to go anywhere. A telephone appointment can change everything.