Your personal finance to-do list for this week:
- Get a free financial-planning consultation if you’re experiencing financial hardship;
- Get help with your car loan or lease if needed;
- Start saving money for taxes if you’re a CERB recipient.
The Pandemic Personal Finance Update is a weekly feature of practical, actionable ideas and tips to help people manage their finances through the difficult times ahead. If there’s anything you’d like to see covered, contact me at rcarrick@globeandmail.com. Let’s get started.
Get a free financial-planning consultation
Financial planning when done by accredited professionals is a valuable service that can help you manage debt and reach a lifetime’s worth of financial goals. But planning costs a good buck, and that means it’s out of reach for people with financial troubles caused by the pandemic.
Several financial planners are doing something about this by offering free one-off consultations of up to an hour in length by phone or video-conferencing.
One of these planners is David O’Leary of Kind Wealth in Toronto, who three weeks ago began carving out time on Fridays to offer no-cost consultations. He spread the word on social media, friends took notice and there’s now a roster of 20 or so planners and advisers willing to offer free one-hour consultations at kindwealth.ca/coronavirus-response.
Fifty or so people have already used the service, including some who have lost their incomes and some who are worried about how falling stock markets will affect their retirement plans. Mr. O’Leary said the consultations offer information about government support programs and help people identify issues they can act on to improve their situation.
Mr. O’Leary said financial stress is palpable when talking to people using the service. “You need to be fairly motivated to book one of these sessions,” he said. “Remember, you’re meeting with a stranger to talk about your financial affairs.”
Free help is also available from the financial planning firm Money Coaches Canada, which is offering free 45-minute Zoom video conferences to help people more effectively manage their cash flow on a reduced income . People who take advantage of the offer are invited to make a donation, with a suggested amount of $25, to Food Banks Canada.
One of the financial lessons taught by the pandemic is the need to be prepared for shocks where you lose income or your investments fall in value. Teaching financial literacy can help people understand the need to prepare for financial emergencies and show them the mechanics of doing this via budgeting and saving.
A financial-literacy program for teens has been made available at no cost by Enriched Academy, a company that provides a FinLit curriculum to schools and organizations. Just click go to enrichedacademy.com and click where it says Free Teen Course. The course consists of about three hours of video covering credit cards and credit scores, student loans, budgeting and saving, careers and money myths.
Financial literacy content for students is also available from the non-profit Canadian Foundation for Economic Education at talkwithourkidsaboutmoney.com. The CFEE also offers some humorous fin-lit videos at MoneyLaughs.com.
Relief on car payments is available
It’s been widely publicized that mortgage deferrals of up to six months are available. Now, let’s turn to relief for people who can’t pay their car loan or lease payments.
Banks specifically include car loans in the types of payment deferrals they will offer, with deferral periods lasting two to six months. The financing arms of the big automakers are also offering relief, according to George Iny, director of the Automobile Protection Association.
Actual terms vary from firm to firm, but the best deals are to defer up to three payments with no extra interest being charged. “The customer would pay nothing except having to make the exact same payments at a later date, in the months following end of the original loan or lease,” Mr. Iny said.
Some automakers are offering three months of relief, while others are asking customers to go month by month. It’s possible you’ll be asked to provide a record of employment to document the loss of a job.
Keep money aside for taxes if you’re receiving CERB payments
The $500-a-week Canada Emergency Response Benefit is taxable, but the full amount is paid up front with no deduction of taxes at source. “Taxes owed will vary from person to person, based on other income earned during 2020,” a spokesperson for the Canada Revenue Agency said by e-mail. “With this in mind, CERB recipients should consider setting aside some of the funds to cover taxes at the end of the tax year, if their situation currently allows for that.”
Some readers have asked whether Canada/Quebec Pension Plan and employment-insurance deductions apply to CERB payments. CRA says the emergency-response benefit is not considered employment earnings, so CPP/QPP and EI deductions do not apply.
With unemployment skyrocketing during the coronavirus pandemic, personal finance columnist Rob Carrick offers some tips on how to deal with creditors and make a bare-bones budget.
The Globe and Mail
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Rob Carrick