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How Covid-19 is Affecting Ontarians Financially

How Covid-19 is Affecting Ontarians Financially

COVID-19 is more than a physical illness, it has affected millions of Ontarians financially too, both personally and in business. Understanding its effects and what supports are available is important as we continue to work our way through the pandemic.

How Personal Finances are Affected

Midway through the pandemic, many Candadians (60%) felt they were ready to handle whatever the pandemic throws their way. They felt they had enough finances set aside and could get through a job loss, getting fewer hours, or a slower economy.

30% of Canadians, however, didn’t feel that way. In fact, this 30% felt that they would never recover from the financial impact of the pandemic because of the devastating effects it has had on their financial well being.

40% of Canadians also state that their financial wellbeing is worse off today than it was before the pandemic. A select few say their financial situation is better, but it’s only 20% and mostly people under age 65.

The good news, however, is the unemployment rate is getting closer to pre-pandemic levels. As of December 2021, the rate was down to 5.9% which is just 0.2 points higher than it was in February 2020 right before the heart of the pandemic.

This is a good sign that Canadins are getting back to work, however, it will take a long time before anyone feels secure or is back where they were financially before the pandemic occurred. 

How Canadians are Dealing with their Financial Issues during this Pandemic

The important thing to understand is there are ways you can deal with the financial issues COVID-19 causes. How you handle those issues matters too.

For example, taking out a credit card and racking up credit card debt isn’t a smart option. It will only lead to ongoing financial issues. Fortunately, less than 10% of Candians racked up credit card during the pandemic

Instead of credit card debt, many Canadians took money from savings to deal with the pandemic’s downfall, this is why an emergency savings account is so important.

Those who didn’t have savings used the following tactics:

  • Borrowed money from friends and family
  • Withdraw from TFSA or RRSP
  • Used a home equity line of credit 
  • Filed a Consumer Proposal or Bankruptcy

How Canadians are Dealing with their Financial Issues during this Pandemic

How COVID-19 Affected Businesses

Individuals weren’t alone in their effects of COVID-19; businesses paid the price, too. 66% of businesses had to layoff almost half of their staff at the start of the pandemic. As much as 33% of businesses also wonder if they’ll be able to continue if things remain the same.

In April 2020, the start of the pandemic, over 100,000 businesses with employees, closed. This led to 30% of the job losses in that month and was devastating for Canadians. While the pace of business closures has slowed down since then with fewer businesses filing bankruptcy, it’s still a constant worry for business owners as they lose employees and customers throughout each wave of the pandemic.

Federal Support Benefits for Businesses

Most small businesses in Canada relied on the federal support provided to businesses during this time. With its expiration in October, 2021, many businesses are wondering if they’ll make it through what’s coming up.

The good news, as of mid-January 2022, the Canadian government came up with a 10K grant for businesses affected by the modified Step 2 Reopening plan. Many small businesses can’t stay open because of the restrictions and the 10K grant is meant to help offset the loss. The government also implemented electricity-rate relief, setting electricity rates at non-peak hours for 3 weeks to help businesses (and individuals) during this time. 

Even businesses that can stay open, there are many factors at play. Many consumers just aren’t shopping like they used to. Obviously, some people can’t shop like they used to because they don’t have a job, have less money saved or credit cards are maxed out. Others, however, just choose not to in order to save more money for what comes next, since the pandemic has created such unknown times.

As we get further into the pandemic with more rules and regulations, it could prove to be even harder for Canadians. For example, the proof of vaccine requirement could shutter many businesses if their target market doesn’t want to comply. Other issues include lower capacity limits and the messages public health sends out about the pandemic, keeping more people home.

Which Canadians are Struggling the Most?

While all Canadians struggled in one way or another, the hardest hit group are between the ages of 45-54 years old.

While it’s hard to pinpoint why this group is so hard hit, many people believe it’s because it’s the generation with kids at home and aging parents. It’s a lot of financial responsibility to take on, and with kids home more and aging parents needing even more care, thanks to the side effects of isolation, it’s a lot on the caretakers.

Many people in this demographic relied on government support to see them through the other side of these issues. Making the ends meet at home while supporting family can be a real struggle. The Canadian government recently implemented The Canada Recovery Caregiving Benefit to help parents and family members acting as caregivers that can’t work or who had to decrease their hours because of caring for someone else. The benefit provides $500 a week ($450 after taxes) for up to 44 weeks, but you must reapply often.

To qualify, you must be either;

  • Unemployed due to caring for your loved one with COVID, or 
  • Suffering consequences from COVID, or 
  • Have had a reduction in hours of at least 50% due to your caregiving duties. 

Final Thoughts

The pandemic isn’t going anywhere anytime soon from the looks of things. With new variants occurring all the time, it’s a new landscape in what feels like every month. The most important thing individuals and businesses can do is protect themselves.

Save as much money as you can, ask for support when you need it, and reach out to others. We are all in this together, and we can support one another. Being Isolated and quarantined is not fun and may cause serious mental health issues, not to mention financial issues.

Use the support available to you, and make smart personal finance decisions as we work to get through this pandemic together. 

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