Monday, April 6th represented the first day Canadians could apply for a federal emergency benefit fund expected to provide up to $2,000 for those out of work over COVID-19. A Barrie financial pro says a strict budget is still required moving forward.
Doug Jones, President of BDO Barrie, says for many, the Canadian Emergency Response Benefit (CERB) won’t be enough to keep many afloat. “The aid package is a good start,” Jones told Barrie 360, “But unfortunately, I don’t think it’s going to be enough for a lot of people who have been laid off. So what I think people need to do right now is they need to figure out what their current situation is,
“For years, we’ve talked about having people doing budgets, that would be the time to pull that budget out. Hopefully, you’ve started one and if you haven’t, now’s the time to start, “Jones continued, “Let’s take stock of where you’re at now. What income Do you have coming in? What are your monthly expenses? What are your monthly bill payments? So we can start to get a handle on your overall situation,”
Now is not the time to be cashing out your RRSP, says Jones. “If you cash them out, you don’t have them for the future, and what you’re doing is you’re cashing out at a low point and creating a taxable income for yourself,” Jones recommends taking a hard look at the household budget for other items to cut. “A budget is something that evolves, it moves over time. It doesn’t have to be static,” Jones points out that banks have offered to defer mortgage payments for up to six months, with over half a million deferral requests already processed. Jones is quick to add it is not a forgiveness, and the interest that is accrued will have to be paid off in the long run.
Jones says the COVID-19 pandemic struck at a time when people were already feeling the pinch financially, pointing to a BDO affordability survey in the fall. “In that survey, it shows that a number of people were already living like 53% were paycheck to paycheck. People were already struggling with some of their basics, like paying their mortgage and buying necessities of life,” says Jones, “There was already an existing condition where people had too much debt. And we’re already feeling the stress. So of course, with this crisis that’s happened now and the number of people who have been laid off, the situation’s only getting worse,”
Were the situation to get worse and push anyone over the edge financially, Jones says it would be important to reach out to a licenced insolvency trustee like those at BDO. “They’re the only people approved by the government to help people restructure under the federal bankruptcy insolvency act,” concluded Jones, “But we do more than that. We help people with budgets, we can talk to you about how to create your budget, we can send you reference material and how to do that budget. And then if it is too far, that’s just too much that we can tell you what solutions are available.”
Feature image courtesy Sara Long via Flickr