Managing your finances as a newcomer to Canada during COVID-19
New to Canada and wondering how to navigate financially during the COVID-19 pandemic? We're here to help, check out our list of tips to help you through this crisis.
By Jessica Martel with insights from Munsif Sheraly
Since the onset of COVID-19 the Canadian employment rate has plummeted, work hours have been significantly reduced, and many are feeling the negative financial impacts of the pandemic.
“Without knowing when the labour market will return to "normal," it's important to do what you can to best manage your finances. If you're new to Canada and feeling unsure about your financial situation, or if you’re curious about what resources are available to you, check out our list of financial tips and advice to assist you through the COVID-19 crisis.”
- Munsif Sheraly, Director, Multicultural Banking, Scotiabank
Financial tips for newcomers during the COVID-19 crisis
1. Create or update your budget
Creating a budget is the first step to managing your finances. It allows you to gain a realistic understanding of how much money you are bringing in each month and how much you are spending on expenses.
When creating your budget, you can divide your expenses into two categories, discretionary and non-discretionary, otherwise known as your "wants" and "needs."
Next, review your list of expenses and see if you can eliminate or reduce any of your “wants." For instance, can you cancel any subscription services or reduce the amount you're spending on cable? Then, focus on redirecting money to your non-discretionary expenses, your "needs." This includes things like your mortgage or rent, utilities, and car payments.
If you'd like some help with budgeting, you can check out the Scotiabank Money Finder Calculator. The Financial Consumer Agency of Canada also offers a free online budget planner that you can use to get started.
2. Assess your debt
Now is also a good time to review any debts that you're carrying.
Ask yourself if you're able to continue paying your debts on your regular payment schedule. You can also contact your bank or mortgage lender to see what kind of relief they can offer you at this time.
“It’s important to reach out to your bank to proactively seek help and discuss your options as many banks have put relief measures in place for credit cards, mortgages and loans.”
- Munsif Sheraly, Director, Multicultural Banking, Scotiabank
Finally, try to stay away from taking on additional debt (we know, easier said than done). If you need to borrow money be sure to research and compare your borrowing options related to interest rates, fees, and repayment terms. Do your best to avoid high fee lenders like payday loans.
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3. Use your emergency fund
It’s recommended having an emergency fund with enough to cover three to six months of expenses. If you are lucky enough to have an emergency fund and you're currently struggling to make ends meet, now is the time to use it. The COVID-19 crisis qualifies as a financial emergency for many people across the country.
4. Consider using non-registered savings
If you don't have an emergency fund, or you've used it all up and you still need money, you can consider using your non-registered savings accounts, like your high-interest savings. Taking money out of your registered savings may require you to pay a withholding tax.
5. Utilize available resources
If you're eligible, be sure to take advantage of the financial resources available to you. Here is a list of some government supports for individuals:
Canada Emergency Response Benefit (CERB)
If you have lost your income due to COVID-19, you may be eligible for this taxable benefit.
Salary top off for low-income essential workers
If you're deemed an essential worker and you earn less than 2,500 per month working full time, you may be eligible for a temporary top up.
Increase to Canada Child Benefit (CCB)
The government will provide an extra $300 per child for 2019-20 beginning in May. If you're already receiving the CCB you don't need to re-apply.
Goods and Service Tax credit
Starting on April 9, 2020, a one-time special payment through the Goods and Services Tax credit is available for low and modest-income families. You don't need to apply to receive this payment, if you're eligible you will automatically get it. While the filing date for 2019 taxes is now June 1, 2020, if you expect to receive the CCB or Goods and Services Tax credit, it's best to file as soon as possible.
To find out more about government support programs and eligibility, please visit the Government of Canada website.
As the Canadian government attempts to navigate this novel virus the rules and resources that are available continue to evolve. As a result, it's a good idea to monitor official sites closely.
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Legal Disclaimer: This article is provided for information purposes only. It is not to be relied upon as financial, tax or investment advice or guarantees about the future, nor should it be considered a recommendation to buy or sell. Information contained in this article, including information relating to interest rates, market conditions, tax rules, and other investment factors are subject to change without notice and The Bank of Nova Scotia is not responsible to update this information. All third party sources are believed to be accurate and reliable as of the date of publication and The Bank of Nova Scotia does not guarantee its accuracy or reliability. Readers should consult their own professional advisor for specific financial, investment and/or tax advice tailored to their needs to ensure that individual circumstances are considered properly and action is taken based on the latest available information.