5 money management tips for newcomers during the pandemic

Savings and budget  by 401K 2012 from Flickr.  CC BY-SA

Any time is a good time to be smart about your finances but it’s especially important during a pandemic. Sickness, reduced work hours, furloughs, and lay-offs are possibilities that can have a big impact on your financial security. Newcomers to Manitoba, especially those who have just arrived, need to handle their settlement funds wisely as they establish their new life here. Here are five money-management tips to help you do just that:

1. Plan your spending

   Budgeting minimizes the risk of impulse-buying and waste. A budget can be a simple list showing how much to allocate for each need/want based on priorities for the period. It can evolve to include savings and investments to meet your financial goals.

   A good way to start is to optimize your fixed expenses. This means: 1) limiting your expenses to items you are actually using, and 2) getting the best price for things that you need. An example under number 1 are subscriptions. Check whether having two or more streaming services (Netflix, Disney+, etc.) plus cable TV is really a necessity for your household. If you have Internet connection, you can probably just watch TV online. However, also recognize that we’re spending more time at home during the pandemic and will need venues for recreation.

   Item number 2 will require you to periodically evaluate services like your insurance, Internet, TV or cell phone service. Consider talking to a sales representative to negotiate better monthly rates. Most providers can lower your monthly payments and even offer perks especially if you’ve been a loyal customer. If this doesn’t work, ask for a quote from a competitor then compare.

   After you’ve reviewed fixed expenses, take time to look at your variable expenses. This is money spent on things like dining out (or ordering in), clothes, household items, etc. See if you’re spending your money intentionally. Again, the goal is to manage your money without being a miser. Use the Budget Planner tool from the Financial Consumer Agency of Canada to help you budget wisely.

2. Know government supports and benefits

   Newcomers to Canada can avail of financial supports like the Canada Child Benefit and GST. These benefits can help supplement your settlement funds to get you through this period. While special COVID financial supports have ended, you can still avail of various supports like temporary mortgage deferral, mortgage relief options or lower credit card interest rates from some banks. Learn more about these programs on this page: What to do if you’re facing financial hardship.

3. Keep debt under control

   “Doomshopping” is a real thing. This is an addiction to online shopping caused by the need to relieve pandemic-related anxieties and fears. This is also made easy because we are online most of the time when we’re at home. This opens you up to targeted advertising based off of your online activities and searches. Before you know it, you are deep in debt and stuck with a pile of stuff you don’t need. If you’ve fallen into this trap, it’s important to recognize that it’s a problem and start curbing your spending. A few tips:

   • Make it hard to buy. Don’t save your credit card details on merchant sites. Aside from making it a little harder for you to complete your online transaction (and give you time to rethink to your purchase), it also gives you added security as it lessens the likelihood of having your bank information stolen.
   • Sleep on it. Make it a policy to pause for 24 hours before buying an item online. This will give you time to think if you really need or even want it. If the product is still on your mind the next day then perhaps it’s worth buying.
   • Limit your online time. Schedule times to unplug from your computer or gadgets. You might find more worthwhile things to do instead of scrolling through social media.
   • Manage boredom. Doomshopping is caused by boredom and the need to have something to look forward to during these times of quarantining and lockdowns. This is why it’s important to have an activity or hobby you enjoy. Turn to more active pursuits whenever the urge to buy takes over.
   • Pay on time. If you can, pay your credit card bill in full and on time to avoid compounding interest charges. Never miss payments as this will have an impact on your credit score. Pay as much as you can if you can’t pay in full.

4. Build your emergency fund

   Saving money during the pandemic may be the last thing on your mind. But if there’s anything that this experience has taught us, it’s that we should always be prepared for any uncertainty. An emergency fund is money you set aside for unforeseen events like sickness, accidents, job loss or sudden need for house/car repairs. What it does is shield you from more credit or from taking money from other sources like your retirement fund or your children’s college fund.

   Most people maintain emergency funds equivalent to three to six months of their salary. This should be enough to cover the basics like food, rent, utilities, loan payments, etc. A quick way to start is redirecting any lump sum amount, like a tax refund, bonus, or maybe savings from a trip you cancelled this year to a high-interest savings account or a TFSA. For more tips on starting an emergency fund, read: Do I really need an Emergency fund?

5. Watch out for scams

   Incidence of scams and frauds have increased during the pandemic. Scammers are targeting victims via phone, email and text. According to CTV News financial commentator Pattie Lovett-Reid, there are five scams you need to watch out for:

   • Fake online loans – This offers immediate loans but will ask for a “security deposit” citing the creditor’s poor credit. After the deposit is sent, the loan money will never be received and the deposit will not be returned.
   • Work-from-home job offers – Fraudsters will ask for money for training or work supplies once a person is “hired” but these materials will never arrive. Another version requires the new employee to deposit a cheque in their account and forward the funds to another person or company. This could be a scheme to move scam money around. The cheque could also turn out to be fake, leaving the new hire to shoulder the money forwarded.
   • Romance scam – This takes advantage of lonely people in isolation looking for love on social media. The scammer takes on a different persona by using an attractive profile picture of another person and lying about their age, profession, hobbies, etc. (this is called catfishing). As the “relationship” progresses, the scammer may ask for money for travel (to meet the victim in person) or for emergency reasons. The scammer disappears once the money is sent.
   • Online marketplace scams – This involves fictitious ads on buy and sell sites like Kijiji or Craigslist. Scammers offer items that are not delivered after payment is made.
   • Pandemic pet scam – Fake breeders or rescue agencies that ask for payment before the buyer even sees the puppy. They also disappear once the payment is made and no pets are delivered.

   Remember the 3Ss so you don’t become a victim:

   • Stop – Don’t be rushed into giving out your personal or bank information. Pause and think before deciding to commit.
   • Scrutinize – Review the transaction and look for signs of fraud.
   • Speak up – Ask questions when something is not clear to you. Report potential fraud or scams if you come across one.

 
Article updated December 8, 2021.
 
Sources: COVID-19: Managing financial health in challenging times, Government of Canada; How to optimize your spending (the 5 step process), Philip Taylor, CPA, Part-time Money; Pattie Lovett-Reid: The 5 pandemic scams you need to know about, Patricia Lovett-Reid, CTV News; and 19 ways to save money during a COVID-19 quarantine, Justine Nelson, Money under 30. Accessed February 23, 2021.