May 6, 2020
Pattie Lovett-Reid: Tips on managing your finances during a crisis
Pattie Lovett-Reid: Tips for handling a financial crisis
Chief Financial Commentator, CTV
I would be hard-pressed to find a family that hasn't been impacted by COVID-19.
Canadians are now facing financial challenges that most have never experienced. Add to this the concern over their health or someone they love and it is easy to see why this is such an anxious time for so many. Sadly, in the short-term, it could get worse before it gets better.
In a new survey by Credit Canada, 66 per cent of respondents said job loss or reduced income would (or already has) caused them a severe financial crisis. Meanwhile, 53 per cent are concerned that a health or mental health crisis has the potential to trigger financial upheaval in their lives.
There are other breaking points that can cause a family to spiral during a pandemic, such as the death of a loved one, an unexpected expense, or even a marital breakdown. Challenges in life can't be put on hold due to the extenuating circumstances we find ourselves in.
The struggle is real and while the government, banks and creditors are offering some resources, it’s ultimately up to you to determine how you will get through the financial crisis facing your family.
Begin by confronting your financial facts. As tough as it may be, you may need the help of a credit counsellor. This doesn't mean you are tipping into bankruptcy. It could, however, allow you the luxury of a little time, expert navigation and understanding of the financial system and options available to you. An objective view of your financial situation could help you realize you’re in over your head and can't do it alone.
A potential red flag is if you are simply unable to pay your bills. According to the Credit Canada survey, the highest number of respondents (one-in-three) were mostly likely to miss paying their credit card bill, while respondents were least likely to skip their car payment (four per cent).
It’s never a good idea to make an arbitrary decision about who to pay and who not pay. Before you make a decision of that nature, understand there could be consequences that are more severe than necessary, such as an eviction notice from missing rent payment, or a utility such as you water or heat being shut off.
Now is a critical time to take control of your financial situation, while at the same time trying to manage and protect your credit. Handling this time in a focused and managed way may help you come out the other side of this pandemic with your financial life intact.
Bottom line: There are so many people in exactly the same situation as you. There is no shame in reaching out for help. The sooner you figure out how reduce your spending, prioritize your debt and get a handle on your financial well-being, the better chance you have of getting through this crisis.