Balancing Your Family Budget During Financial Drought
September 15, 2020
How to reduce your expenses in times of pandemic
How’s your budget looking in this time of pandemic? Are you among those who suffered a decrease in their income due to layoffs? Did you have to drastically review your expenses to face the situation? You’re not alone! According to the Government of Quebec, the important measures implemented to slow down the spread of COVID-19 led to over 820,000 jobs lost, and the unemployment rate rose from 4.5% in February to 17% in April. And this doesn’t include the people who, although they didn’t lose their job, had no other choice but to work less.
Families had to be creative and rigorous to balance their budget. We already shared a few tips in a previous article, but here are some tricks you might not have put into practice yet and that could save you dozens, if not hundreds of dollars each month!
1. Set a Budget
Experts agree: it’s crucial you know where your money is going, especially during difficult times. Many families substantially simplified how they managed their budget during lockdown: no more restaurants, outings, dance lessons and gym subscriptions! But there are still several expenses that haven’t been affected by the coronavirus, and your financial planning for the upcoming months will have to take these into account. By drawing up the list of incomes and expenses of your household, a budget will help you pinpoint unnecessary expenses more easily. The Government of Canada offers My Monthly Budget, a simple and free online tool to plan your family budget.
2. Reduce Certain Regular Expenses
You can easily find several ways to cut down your expenses, like reducing—or suspending!—your cell phone or TV plans, cancelling subscriptions you don’t benefit from and reviewing your spending habits by using coupons more regularly, for example.
Of course, during financial drought, you might want to adjust your TFSA, RRSP and RESP contributions. The RESP and TFSA are subject to distinct tax treatments and the RESP provides access to generous government grants; contact your representative to get a clearer picture. It’s your representative’s job to advise you, whether or not you’re doing well financially.
3. Review Your Insurance Policies
If you haven’t shopped around for your car or home insurance policies lately, you might benefit from contacting your insurer or broker to see if your insurance coverage is still appropriate. If you haven’t filed a claim in a few years, you can also get quotes from other insurers and potentially save money.
4. Reduce Debt
Debt can become a big burden when you experience a decrease in income. In the first few weeks of lockdown, several financial institutions offered relief measures, like mortgage payment deferrals for 3 or 6 months. Don’t hesitate to ask: you might still be able to benefit from these measures—but keep in mind they’re only temporary.
If you have high interest rate debts, like unpaid credit card balances, try debt consolidation; it could significantly reduce your monthly payments of interest charges and relieve your family budget.
5. Know How to Say No!
Everything’s easier when a paycheck is automatically deposited into your bank account every week. If this is no longer the case for you and you need to tighten your belt, you’ve probably already changed some of your habits and given up certain expenses, more or less voluntarily. Decreasing your fuel consumption as well as foregoing your Friday night pizza and daily large latte at the drive-through are expenses which, when put together, represent several dozens of dollars each week. The hardest part is often to resist the desire to spend.
What about you? How did you adapt your family budget in this time of pandemic? We want to know your tips!