By Alison Izat, CFP, Plan Institute
It’s six months into the Pandemic, and if you haven’t already, it’s time to take a good look at your finances. I wrote an article for Plan Institute back in April 2020, that provided some tips and guidance to help you prepare and stay on top of your finances during the pandemic. But as things are rapidly changing, so too is my advice. These suggestions are focused on people with disabilities but can also be helpful to anyone.
Tax and income assistance
The first thing to check is whether you are utilizing all the tax credits available to you. There are many benefits and tax credits available for those who live with a disability and those who support them. Some of these benefits and credits include the Disability Tax Credit, medical expenses, Canada Caregiver Credit, and the Child Disability Benefit. Check the Government of Canada website for more information about what’s available to you.
If you qualify, be sure to check you received the additional Special Good and Services Tax credit payment and Child Tax Benefit announced and paid this spring. Also, check if you are eligible to receive the one time non-taxable, non-reportable payment of up to $600 for people with disabilities announced this July. For those who have a disability, but have not yet applied for the DTC, you have until December 31st, 2020 to do so! Be certain to be included in this support payment should you now qualify. If you need assistance or have questions about the DTC, Access RDSP offers free support: 1-844-311-7526.
To view which payments you have received, the CRA website offers an online portal, My Account for Individuals, that allows you to view your benefits and credits. Also check in on your Provincial benefits, for example the BC government’s additional payment of $300 for April-June for those on PWD. Consciously use these extra funds to place yourself in a better position to successfully cope with the pandemic such as having the tech you need, creating an emergency fund and adding things to your life you enjoy such as exercise, creative projects or reading.
Manage your cash flow
Many of us have seen our incomes disrupted or reduced as a result of job losses or reduced hours.
While there are Federal and Provincial income supports available, these will likely not meet the level of income you were previously on. It’s therefore crucial to budget, review expenses and find ways to supplement your income where possible. The Federal Government has a number of online Financial Tools and Calculators, self-assessments and guides to help you plan and find the best options for your needs. It is important to regularly check your spending against these plans and maintain an emergency fund where possible.
Try and think ahead about upcoming costs or expenditures which will impact your cash flow. Do you have the resources and equipment you need to keep working and stay connected? Are you covered should your technology break or need upgrading? A small expenditure on your computer may prevent a larger expense. Be proactive and think ahead to keep yourself safe and supported. If staying at home or working from home more, can you un-insure your car? Or, if you need your car and are finding funds tight, you can request a deferral of your monthly payment through ICBC. Continue to think creatively about how you
can reduce expenditures or defer payments to a place where your income levels are more stable.
Keep on the lookout for additional financial assistance that will help you to cut expenditures. For example, Telus is offering a reduced internet rate for people with disabilities for the next 24 months for British Columbia (BC) and Alberta residents. Do you have a bank account that you barely use yet charges you monthly? Simplify to one account, closing out any excess accounts you don’t use. For those with an RDSP, your financial institution may be able to offer you a paired free checking account. Utilize this perk if you haven’t already! And, ensure you are utilizing the benefits available for those on Provincial disability income, such as BC’s dental and optical coverage. Think local too with discounts specific to your city or town, such as Vancouver’s Leisure Access Program which includes discounts on many activities such as pitch and putt and the Van Dusen Gardens.
You may have relied on short-term or emergency finance to manage through the past few months or be struggling to meet minimum payments on previous debts such as your mortgage or outstanding credit card balances. Similarly, as some of the financial supports such as the CERB and student loan payment deferrals subside this fall, make sure your debts are manageable for the winter and onward. Consider these steps to help maximize the use of your income and reduce your debt:
- Prioritize paying down your debt with the highest interest rate first, then prioritize paying down your debt with the smallest outstanding balance.
- Consolidate debts where possible. Start by speaking with your Financial Institution. It is always better to consolidate than defer payments. With consolidation you will have a lower overall payment due to receiving a much lower rate than credit cards charge. This manageable payment will give you peace of mind that you are paying off your debts over a set number of years.
- Consolidation is not always possible, so credit counselling is an option worth considering. Credit Canada, a non-profit credit counselling agency, has produced a COVID-19 resource centre to help people manage their money through the pandemic. They also offer a helpful debt calculator which outlines and projects different solutions for your outstanding debts.
- If you have a mortgage, be sure to look at renewing your interest rate. Interest rates are at a relative low point right now, which is a must to capitalize on.
- Similar to consolidation, refinancing to incorporate your outstanding debts into your mortgage can give you one of the lowest rates on borrowing.
Everyone’s financial situation is different, so it’s important to take a big picture view and be in touch with any financial professionals you regularly work with. There are also free advice lines and supports you can draw on such as the Credit Counselling Society. Make sure to research who you’re speaking with and try to obtain at least a couple of opinions from different providers.
It’s also important to stay vigilant and be aware of financial fraud. Phishing and other common Banking and Finance fraud schemes are on the rise due to an increase in online activity over face-to-face services. Awareness and training, for example Get Cyber Safe, will keep you safe and in good stead.
Be sure to update your smartphone, mobile devices, computers and applications as soon as possible or better yet, set them to update automatically.
If you haven’t already, ensure you are using Direct Deposit with work income, the CRA, insurance and disability payments. It’s considered to be the most secure way to be paid. Direct Deposit will ensure your money makes it directly to you quickly and safely.
These are still trying and uncertain times and you are not alone. The Federal Government has provided additional funding for the social and economic inclusion of persons with disabilities—please be sure to draw on the resources available.
Alison Izat is a Certified Financial Planner from Vancouver, BC who also works as a Helpline Advisor and RDSP Workshop Facilitator for Plan Institute.