Financial literacy and credit counsellor Pamela George is shown in her home office in Ottawa, on Tuesday, Dec. 29, 2020. THE CANADIAN PRESS/Justin Tang

Financial literacy and credit counsellor Pamela George is shown in her home office in Ottawa, on Tuesday, Dec. 29, 2020. THE CANADIAN PRESS/Justin Tang

Planning your 2021 budget a chance to reassess your spending and make changes

Saving a six-month buffer is important to start building that rainy-day cushion

The pandemic put household budgets to the test in 2020.

For millions it meant the loss of a job or a reduction in hours, while for others it meant unexpected expenses as they made the shift to working from home.

So as you build your budget for 2021, financial experts say you need to create a robust plan that’s built on realistic expectations for your income and your spending.

Financial literacy and credit counsellor Pamela George says if you tapped your emergency fund to help deal with the financial stress of the pandemic last year, topping it back up should be a priority.

And for those that still don’t have at least some money put aside in an emergency fund, creating one should be at the top of the list.

George says it can be overwhelming to think about saving a six-month buffer, but even if it means starting small, it is important to start building that cushion.

“Start with $500, when you get to $500, go for $1,000,” she says.

“Do it in $500 increments and motivate yourself like that.”

George says many may have been spending less on coffees and lunches out while they were working from home last year, but that didn’t mean they were socking that money away in savings.

She says based on what she’s seen the spending for many shifted during the pandemic to takeout orders for dinner or online shopping, but that setting up your budget for 2021 is a chance to change that and use that money to reduce debt or increase savings.

It is also important to account for the rising costs for things like transit, groceries and property taxes, George says, even if your salary may not have kept pace.

“If you’re a homeowner and you’re budgeting for property taxes, you need to know that’s gone up,” she says.

“And while it’s not a whole lot per month, if you pay it every six months or once a year. depending on how you pay your taxes you need to have that extra money.”

Stacy Yanchuk Oleksy, director of education and community awareness at the Credit Counselling Society, says it is important to understand where you’re spent your money in 2020 when planning for 2021, but that this year likely won’t look like last year.

“I don’t think you can take a 2020 budget and select all and copy it and make your 2021 budget, I think that there will be some changes,” she said.

“Some people might go back to work, some people might stay working from home permanently and others might have to go back into the office at some point.”

The difficulty in planning a budget for 2021 comes with the uncertainty. COVID-19 vaccinations have started, but as the latest rise in cases and lockdowns have shown, we’re not out of the woods yet.

Yanchuk Oleksy says if you’re dreaming of a vacation later in the year if things improve, you should set money aside for it in your plan because you don’t want to get to Christmas next year and realize that while restrictions may be loosening that you can’t afford to that trip to see family.

“The beauty about planning for it is that even if you can’t travel in 2021, you can use that money elsewhere,” she said.

Should the pandemic situation improve you may also need to plan for expenses that you haven’t had to account for while working from home, such as commuting, coffees, lunches and child care.

“They’ll have to get reinserted into the budget, we just don’t know when that will be,” Yanchuk Oleksy said.

George says don’t worry if you don’t follow your budget all of the time because we are in the middle of a global pandemic.

“We need to understand that we’re in a pandemic and that means that we’re stressed about many things and if you have a budget and you fall off they budget sometimes, that’s OK,” she says.

“It doesn’t mean you throw everything in the fire and you walk way. What it means is you slipped up and you get up the next morning and start afresh.”

Craig Wong, The Canadian Press

Like us on Facebook and follow us on Twitter.

Want to support local journalism? Make a donation here.

Finances

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Interior Health reported 79 new cases of COVID-19 and two new death in the region Friday, Jan. 22, 2021. (Ben Hohenstatt/Juneau Empire)
79 new COVID-19 cases, two deaths reported in Interior Health

Both of Friday’s deaths were both recorded at long-term care homes

Interior Health reported 91 new COVID-19 cases in the region Jan. 20, 2021 and three additional deaths. (Jennifer Smith - Morning Star)
95 new COVID-19 cases in Interior Health, two deaths

Another member of Vernon’s Noric House has passed

A specialized RCMP team is investigating a suspicious trailer, which might have connections to the illicit drug trade, found abandoned outside a Cache Creek motel. (Photo credit: <em>Journal</em> files)
RCMP investigating suspicious trailer found abandoned in Cache Creek

Hazardous materials believed to be consistent with the production of illicit drugs were found

The trustees of the Spences Bridge Improvement District argue that one reason the EV charging station (l) should be moved is because it could compromise emergency response from the nearby fire hall. (Photo credit: Barbara Roden)
Time is running out for Spences Bridge EV charging station

Lease for the site runs out at the end of January and no new agreement has been reached

Areas in blue show properties in Cache Creek zoned C1, which the village’s Cannabis Regulatory Framework proposes as properties where retail cannabis stores could be sited. The area outlined with a dotted orange line shows a 200 metre buffer zone around Cache Creek Elementary School, within which no retail cannabis establishments could operate. (Photo credit: Village of Cache Creek)
Cache Creek council gets more input on cannabis regulations

Council considers options to regulate retail cannabis sales and production within the village

Toronto Public Health nurse Lalaine Agarin sets up for mass vaccination clinic in Toronto, Jan. 17, 2021. B.C. is set to to begin its large-scale immunization program for the general public starting in April. THE CANADIAN PRESS/Frank Gunn
B.C.’s COVID-19 mass vaccinations expected to start in April

Clinics to immunize four million people by September

Sunnybank in Oliver. (Google Maps)
Sunnybank long-term care in Oliver reports third COVID-19 death

The facility currently has an outbreak with 35 cases attached to it

Chief Public Health Officer Theresa Tam speaks during a daily briefing in Ottawa. (THE CANADIAN PRESS/Adrian Wyld)
31 cases of COVID-19 variants detected in Canada: Health officials

Dr. Theresa Tam made announces 13 more variant COVID-19 cases in Canada

Royal Inland Hospital in Kamloops. (Dave Eagles/Kamloops This Week file photo)
COVID-19 outbreak declared at Kamloops’ Royal Inland Hospital surgical unit

Despite 6 South being a surgical unit, RIH said surgeries are continuing at the hospital

Daily COVID-19 cases reported to each B.C. health region, to Jan. 20, 2021. Island Health in blue, Northern Health green, Interior Health orange, Vancouver Coastal in red and Fraser Health in purple. (B.C. Centre for Disease Control)
B.C.’s COVID-19 infection rate stays stable with 508 cases Friday

Vaccine delivered to more than 110,000 high-risk people

The District of Saanich’s communications team decided to take part in a viral trend on Thursday and photoshopped U.S. Senator Bernie Sanders into a staff meeting photo. (District of Saanich/Twitter)
Bernie Sanders makes guest appearance municipal staff meeting in B.C.

Vancouver Island firefighters jump on viral trend of photoshopped U.S. senator

School District 57 headquarters in Prince George. (Mark Nielsen, Local Journalism Initiative Reporter)
Prince George school district settles with sexual abuse victim

Terms were part of an out-of-court settlement reached with Michael Bruneau, nearly four years after he filed a lawsuit

Surrey provincial court. (File photo: Tom Zytaruk)
New COVID-19 protocols set for provincial courthouses

The new rules were issued on Jan. 21, and took effect immediately

Police in Vancouver looking for male suspect who allegedly spat and attacked a store manager for not wearing a mask, at 7-Eleven near Alma Street and West 10th Avenue just before noon on Dec. 17, 2020. (Vancouver police handout)
VIDEO: Man spits on 7-Eleven manager over mask rule, sparking Vancouver police probe

‘Unfortunately, the store manager sustained a cut to his head during the assault’

Most Read