Dealing with a reduced or lost income

Man turning a tap

Compressing expenses when income gets tight    

Our legal community is feeling the impact of the economic downturn in many ways, including job losses, layoffs and reduced revenues. Many families are adjusting to a single income, perhaps for the first time. However you’ve been affected, there are plenty of people ready to offer sound advice and guidance to help you navigate through the financial challenges that have been brought about so quickly.  

Your Lawyers Financial team is always here to answer any of your questions. In the meantime, here are a few tips for making your money go a little further if you're feeling stretched. 

Create a budget and forecast for 2020

Take some time to review where your money is going and how your priorities might need to change in the short term. For example, if your income has been reduced, you may be better off carrying your RRSP contribution room forward. The math isn’t easy on this one. So, get professional advice from someone who can view your whole financial plan and put this decision in context. 

Consolidate debt

The budget you build will show you how much you owe and how much you spend on interest each month. Your occupation combined with a good credit score could allow you to reorganize your debt in order to lower payments. Work with your bank to explore the idea of refinancing your mortgage or consolidating debt to lower your monthly payments. 

Save on basics 

Carefully review your expenses. Highlight anything you can live without or find something similar for less or even free. Some of these expenses may be stand-alone items such as magazines, online subscriptions or health-club memberships but many expenses are bundled into bigger bills. Unpack your TV bundle. Cross-examine your software costs. See whether any upcoming bills, such as annual insurance premiums, can be converted into monthly payments to increase cash flow in the short term.

Get cooking

Cooking at home is a huge opportunity to cut costs. A story in Forbes found that it is typically five times more expensive to order delivery from a restaurant than it is to cook at home1. Furthermore, you can control the ingredients you use, cut back on salt, fat and sugar, and better manage your portion sizes. You save money and improve your health at the same time.

Beware of the basket

Filling your online shopping basket is a tempting way to pass the time but a tighter budget calls for a disciplined approach. Stick to essentials, support your local community as much as you can, and think needs not wants. Agree to treat yourself when life returns to normal. 

File your income tax

If you’re expecting a tax refund, ignore the extended deadline for filing your personal income tax. File well ahead of the new June 1 deadline to get your refund as soon as possible.

Learn about government benefits

Depending on your income, you may qualify for the new Canada Emergency Response Benefit (CERB). This taxable benefit may provide some temporary relief but only if you have been laid off with no source of income. The CERB also prohibits moonlighting, such as freelancing. You can learn more about eligibility and see any updates to the criteria here.  

Lastly, listen and over-communicate

You make it easier for people to help you through all aspects of the current situation, including financial concerns, when you share information and stay open to hearing new ideas and exploring new options. 

For support and advice to help you get through these challenging times, contact your Lawyers Financial Advisor

 

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1 Here's How Much Money You Save By Cooking at Home. July 10, 2018, 01:18pm EDT. View the article here

May 6, 2020