Basics, Wellness

The Ultimate Financial Guide to COVID-19: How to Protect Your Finances During the Coronavirus Crisis.

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COVID-19 is a health crisis, but it will have immediate and lasting impacts on your financial health. This article is a one-stop-shop for all of the financial information you need and steps to take. We are updating it more than daily as new measures are announced.


Quick summary – If you read nothing else, read this:

Government support: We have outlined the government financial remedies below. We have only included confirmed actions. A lot of the news headlines right now are covering “proposals” from the Government of Canada. They are not confirmed. As they become realities, we will update this page.

Reduce unnecessary spending: In the coming weeks, costs will rise for delivery items and other services, and there is no clear timeline. One month from now, you will be very glad you saved those spare dollars today.  Read below for more strategies.

Rent and mortgage payments: If your income is affected and you are unable to make an upcoming rent or mortgage payment, there are specific steps to take, listed below. Call your landlord or lender. Do not assume that you do not need to make these payments because we are in a state of emergency. Not making timely payments can dramatically affect your credit score, interest payments, and can place you in a more vulnerable financial position. The same goes for any other debt payments such as loans and lines of credit.

Reduced income:

COVID-19: Applying for EI and other income supports

If your earnings have reduced, even if you can afford next month’s rent or mortgage, talk to your landlord ASAP about reducing your rent for a few months and speak to your lender about options for your mortgage. The Government of Canada has some solutions in place and others are going to be available shortly. Read below to learn more. EI measures in place are based on eligibility, they are not guarantees.

Job security is uncertain, we’ve put together an FAQ to help you navigate.

COVID-19: All your Coronavirus Job Security Questions Answered Here

Redo your budget. Expenses you had before have disappeared and new costs have likely increased.

Credit Cards:

Credit cards are adjusting interest rates to help Canadian consumers:

BMO/Scotia/CIBC = 10.99%
RBC/TD = 50% interest rate cut
Swipe for payment deferral info

Can you defer a credit card payment?

Perhaps: Many are advertising deferrals of up to 6 months, but it’s based on your eligibility which is different at each bank
You still have to make the first move and reach out to your bank to get lower interest rates or deferred payments
You will still owe the money at the end of this period
Lower interest rates on credit cards could still be your highest interest debt. This is not a sign to spend more.
Use your cards carefully, at this point, they’re better than most predatory payday loan options

Self-employed or small business?

READ: COVID-19: Benefits for small businesses and the self-employed

The Full Details

This next section goes into full detail on the updates you need to know and the steps you need to take. We cover taxes, mortgages, rents, government relief, lost income measures, and how to manage your money through this COVID-19 Coronavirus crisis.

#1. Taxes

Tax Filing Deadlines have changed from April 30th until June 1st 2020 for personal taxes. The deadline to pay off outstanding taxes interest-free is extended to August 31st or later (at this time). This applies to income tax due as well as installments. No interest or penalties will apply during this period.

Warning! If you are expecting any benefits or entitlements, you should file your taxes on time to ensure that you receive those entitlements in a timely manner. This includes GST credits and the Canada Child Benefit.

For businesses, August 31st is the new deadline for corporate tax payments to be made, including any scheduled installments that would otherwise be due. Liaison officers that were typically available to small businesses in person will now be available over the phone to help them understand their tax implications. There is also a temporary suspension on collections and audits.

Due to additional risk in meeting with tax preparers at this time, the CRA is recognizing electronic signatures temporarily. This applies to authorization forms T183 and T183CORP

Steps to create your MyCRA account here. This takes some time, if you haven’t created one yet, do so now.

#2. Mortgages and Rents

Don’t be fooled by news headlines of rent or mortgage halts. The lenders, banks or landlords are the ones who make the decision, based on recommendations of governmental organizations, insurers and more. This is being updated constantly. Currently, Ontario has halted new evictions, and postponed scheduled enforcement orders of evictions. This is temporary and until further notice.

Big bills like your mortgage or rent are the most frightening. While you may have some savings, most Canadians don’t have enough to cover more than 1 month of their rent or mortgage if their earnings were to decrease, or worse, stop.

Making your upcoming mortgage payment

If you have a mortgage payment coming up that you either cannot make, or that would use up a lot of your cash available right now, we recommend speaking to your mortgage company about a break. You may have already received an email from them. Most big banks will offer what is commonly known as a “mortgage deferral”. This doesn’t mean the monthly payment disappears, it just means you are delaying your payment for a month or more without the risk of having to foreclose on your property. Most banks don’t want to take over your house, so they are very willing to work with you to find alternate solutions. The sooner you get in touch, the more options you will have available. Don’t wait until the second or third month of trouble before reaching out. Be honest and open with your situation.

The article linked below gives you the best strategies for getting mortgage relief.

READ: COVID-19: Our Top Tips to Help you Manage Your Mortgage Payments

Making your upcoming rent payment:

Do not assume your rent payment can be missed because of COVID-19. You can be evicted and your landlord may seek collection. It is best to speak with and work with your landlord directly to come up with a payment plan or other arrangement for your rent payments if you cannot make them at this time. Be sure to get any agreed-upon arrangements in writing.

#3. EI and Other Income Supplements

As many Canadians are either not working or only partially working at this time, Employment Insurance (EI) benefit access rules have changed. Everybody is not eligible for EI. If you are over 65, you might not be eligible, if you are self-employed, you need to be registered here.

If you are sick or unable to work due to injury, illness or quarantine, you can apply for EI sickness benefits here. If you have been placed in quarantine and cannot work, Service Canada has committed to the following measures:

  • Priority EI applications for quarantined Canadians

  • No medical certificate requirement

  • Reviews of the waiting period on a case-by-case basis

  • A new telephone line established to assist with applications and the waiver of the waiting period. Call 1-833-381-2725 (toll-free)

There are many more details about accessing EI, the application process and options if you’re self-employed, a freelancer, or otherwise not eligible.

READ: COVID-19: Applying for EI and Other Income Benefits

Remember that applying for these benefits will be fastest through a MyCRA Account and a My Service Canada Account. Learn how to set up your accounts here.

Be sure to check your provincial updates for changes to sick leave policies. Most companies should be doing their best to offer paid sick leave. Currently, Alberta has committed to a lump sum payment for workers. Click here to learn more, details still to come.

There are deferrals for utility payments for up to 90 days in Alberta across most organizations.

The Work Sharing Program is an adjustment program to help employers and employees avoid layoffs due to temporary reductions in business activity. Essentially, it allows Service Canada, the employer and the employee to agree to a reduced schedule of work to allow different employees to share the money remaining. The Government of Canada recently extended the maximum duration of the Work-Sharing program from 38 weeks to 76 weeks across Canada in light of the Covid-19 Coronavirus Crisis. Click here to learn more.

Student Loans Update:

The National Student Loan Service Centre said the pause on payments and interest accumulation takes effect Mar. 30 and will last until Sept. 30.

If you have a small business

See the Work Sharing Program section above.

The Government of Canada has announced several proposals, as they come to fruition, they will help with the burden. In the interim, we really like this resource and this founder guide to walk you through the implications on your business. You will be able to access this money through private-sector lenders soon. There are lots of employment law, investor and cash flow considerations for you, but not many have crystallized yet.

There are proposed funds to help small businesses keep employees paid. As details on application timelines come out, we will keep you posted. Click here for an FAQ for small businesses.

Temporary wage subsidy : Small employers may be eligible for a temporary wage subsidy to help prevent lay-offs. This subsidy, which will be available for three months, will be equal to 10% of remuneration paid during that period, up to a maximum subsidy of $1,375 per employee and $25,000 per employer. Businesses will be able to benefit from this support now by reducing their remittances of income tax withheld on their employees’ remuneration. This measure applies to corporations eligible for the small business deduction, as well as non-profit organizations and charities. Businesses can benefit immediately by reducing their remittances of income tax withheld on their employees’ remuneration.

Looking at this proposal a little more closely, in order to receive the $1,375 benefit from the government, employers would need to expend approximately $1,000 to the government in CPP and EI. Might not be worth keeping employees on at that cost.

This “benefit” is available immediately and supporting legislation is to follow the release of the Plan.

 #4. Managing Your Money During the Covid-19 Crisis

The goal is to recreate a budget that takes the money saved from entertainment, travel, dining out, gifts and more and redirect it to an emergency fund. Check out the top budgeting tools here. Learn how to improve your spending habits here.

We cannot stress enough how critical it is to eliminate any unnecessary expenses at this time. Conserve your cash, do not buy anything you don’t need, recalculate your budget to reflect your new reality. As we don’t know how long or how severe the isolation will be, it is going to be critical to make the money you have now work best for you. Organizations that are employing workers today may not be able to continue doing so. Consider living on less, try a no-spend month, order in food less and, if possible, find ways to reduce your bills.

Utility companies for power, cable, internet, hydro, gas and more are offering different measures to help their clients through the crisis. Take the time to reduce expenses where you can.

Remember, just because there is an announcement of refunds, it doesn’t guarantee that you will get one. There are many cases of fine print or delays in these refunds. Now is the time to be very careful and focused on your financial life.

#5. Understanding the Economic Climate

The Federal Government continues to take measures to protect Canadians, collectively called a “stimulus package”. This is ever-evolving and we update this guide daily. We have tried to break down these measures for you below so you can understand as much as possible.

Cutting the Bank of Canada overnight rate target by half a percentage point, the second change in a matter of 2 weeks. What does this mean? The Bank of Canada overnight rate typically sets the rates at which banks will lend out money. By reducing the overnight rate, the Bank of Canada is doing its part to prompt large banks and financial institutions to reduce their prime lending rates. These actions are due in part because of the COVID-19 risk, as well as the decrease in persistently low oil prices.

What does this mean for your investments and your retirement savings?

Investment advice is varied and, if you work with a particular investment professional, we recommend you seek that advice independently.

Below are general thoughts on how investments should be viewed in low times. For the average Canadian that can do so, the general recommendation at this time is to hold steady and remove emotion from the equation. If you are invested in the markets at this time, know that these ups and downs are part of the experience. You cannot control the markets but you can control your reaction to them. If you make snap decisions to sell, you will be crystallizing losses when values are low. If you run out of money to live on, you will also have to sell earlier. It takes much longer to recover when you sell investments at low prices.

Expect that markets will continue to be volatile.  The low volatility world has experienced in the last decade should not be used as a guide of what is to come.  That’s because stability (or the appearance of it) breeds instability.  The safer people feel, the more risk they are willing to take.  The willingness to take more risk is precisely what makes the system more unstable.

Do your best to keep yourself in a position where you do not need to sell if you don’t want to. If you are thinking of entering the market, this may be an opportune time to do so. Be sure to evaluate your risk tolerance, volatility tolerance (the ups and downs) and time horizon (how much time you have to keep the money invested).

#6. Organizing your Financial Life – Financial Self-Care

The forced isolation of the COVID-19 Coronavirus crisis means you have some spare time at home – why not get organized and ahead of your financial life? Get started by following the steps in this guide. If you are spending more time with family, why not take that time to create a Family Mission Statement? This can refocus your family priorities both emotional and financial. Click here to learn more.

 There is no greater reminder than a health crisis to realize the importance of estate planning. Are your loved ones protected if you pass away? Are your wishes protected if you are incapacitated due to illness. How about your parents? Have they got a will in place? Click here to learn about the steps you need to take or get started on our Filing Cabinet now.

Trip cancellations and other refunds: If you have trips to cancel, do your best to contact providers and get refunds sooner rather than later. Phone wait times are long, but check the websites for alternative measures and guidance. There is no guarantee that these companies will be able to honour these refunds in the long term. Remember that many trip cancellation insurance policies are not covering COVID-19 related travel interruption right now.

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