VANCOUVER -- Are you financially prepared for 2021? Tax season is coming up, benefits are running out and economic uncertainty continues.
The year 2020 was a strange road to travel and everyone’s journey was unique.
Some lost their jobs and were devastated, others kept getting a steady paycheque and saved more than ever, and some needed help to get through it. So what’s ahead for this year?
“A lot of people are coming into 2021 with a lot of the baggage from 2020,” said Adriana Molina of Credit Canada.
Deferred debt payments are coming due with interest, maxed out credit cards will need to be paid, some may have to repay the Canada Emergency Benefits they were not eligible to receive, and others who got it may not have held back enough to pay the required taxes.
“Their debt situation in most cases is worse than ... before the pandemic hit in 2020,” Molina said.
However, others who kept their jobs and a regular paycheque may have actually saved more money last year, with businesses closed and travel restricted.
“Try to keep those savings habits going forward," said Scott Evans, senior financial advisor at Blueshore Financial. "I think it’s the new habits that we create that are going to really pay dividends down the road.”
For those struggling to make ends meet, try to seek help now and work out a financial plan. Credit counsellors and financial planners can make a big difference.
“Eighty-five per cent of people who have a financial plan feel a lot more positive about their finances and about their personal lives,” Evans said.
In addition to planning on where to invest, it's important to create some potential defensive strategies for the year ahead.
- Establishing an emergency fund, in cash or by securing a line of credit on your home
- Insurance for health issues that may limit your ability to work
- An estate plan
- Help with your taxes
“They know all the potential deductions that you might have that you might not be aware of," said Molina.
There have been some tax changes this year. For instance, if you have been working from home more than 50 per cent of the time, you may be eligible to claim a flat rate tax deduction of $2 per day, or you could itemize your expenses like a portion of your rent or mortgage payment for office space, utilities and other expenses.
For those who made some knee jerk decisions when the stock markets fell and missed the rebound,or made some bad stock purchases, give yourself a break.
“And don’t dwell on the negative. Try to pick out the positive pieces that you can take concrete action on to put yourself in a better place for 2021,” suggested Evans.