We’ve been told to prepare for a long recovery from the global COVID-19 pandemic, but a new survey suggests many Canadians fear that, for them, a full recovery will never materialize.
That’s what 30 per cent of respondents said in a new survey from FP Canada, the industry licencing group for financial planners. It’s a clear sign of just how poorly Canada’s heavily indebted consumers were prepared for an economic shock of the sort we have seen this year.
The “Coping with Covid’s Financial Impact” survey found 42 per cent of Canadians are “not in a strong enough financial position to handle the challenges of the second wave of COVID-19.” Virtually the same percentage ― 41 per cent ― say they are already in worse financial shape than they were before the pandemic.
Watch: Need to create a budget? Here are the steps. Story continues below.
Youth and the “sandwich generation” ― those caring for both children and aging parents ― are feeling particular pressure, said Tina Tehranchian, a Toronto-based certified financial planner at Assante Capital Management Ltd.
The “sandwich generation” are “usually baby boomers close to their own retirement years who have to (plan for) a longer lifespan than their parents, which means they need more savings to live on,” Tehranchian told HuffPost Canada.
“But some of them still have kids in university or even high school, and they have aging parents. That doubles the pressure on anyone in that situation.”
Half of young adults sought government help
Youth are another group who have been particularly affected by the economic shock. The FP Canada survey found that slightly more than half of the adults under 35 had borrowed money in some way to make ends meet. Half had also taken advantage of some kind of government subsidy or payment deferral program during the pandemic, and 29 per cent relied on the Canada Emergency Response Benefit (CERB).
“If the government benefits were not there, the situation would have been much more dire,” Tehranchian said. “It’s… great that the government stepped in and provided the temporary help, but at the same time, people feel more financially insecure than before the pandemic, and it was alarming (to see) how many people are pessimistic about their future.”
Though CERB has been wound down, the federal government replaced it with a Canada Recovery Benefit (CRB) that pays out $500 per week as CERB did, though qualification criteria are more stringent. Many CERB recipients have been shifted onto a reformed and more generous Employment Insurance system.
The federal Liberals have also extended the Canada Emergency Wage Subsidy, which helped businesses keep people on the payroll by subsidizing wages up to 75 per cent. The program has been extended to the summer of 2021, and the government will keep the subsidy rate at 75 per until at least December.
Many opportunities to save money
For those facing a financial crunch, Tehranchian suggests taking advantage of the many opportunities to save money that have become available in the pandemic.
“To improve your financial position you have to either increase earnings or decrease spending. It may be difficult to increase earnings, but you might be able to tackle your expenses,” she told HuffPost Canada.
Look at subscriptions you may not need, she suggested, and check your phone bill ― there may be less expensive plans out there, though you may have to call your provider and ask directly.
Day-to-day expenses can be slashed too. Amid the COVID-19 lockdowns, people have seen some expenses plummet, for instance on eating in restaurants, travel and new clothes ― so much so that Canadians’ savings rate skyrocketed this spring amid the lockdowns, to a 20-year high of 6.1 per cent of disposable income.
Tehranchian also suggests taking advantage of historically low interest rates, by consolidating your credit card debt or refinancing your mortgage.
Find a way of keeping track of your daily expenses, she suggested.
“It’s a very enlightening exercise, because we all have assumptions about how we’re spending our money, but the reality may be totally different. You can plug holes that are preventing you from reaching your important goals.”