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

John Rustad, MLA Nechako Lakes. (Submitted photo)
Nechako Lakes MLA questions vaccine supply shift

John Rustad wonders why elderly aren’t being vaccinated while younger people are

Nak’azdli Whut’en Chief Aileen Prince provides an overview of past and future projects in a Facebook video Friday, Jan. 22. (Nak’azdli Whut’en Facebook image)
Anxiety and grief, Nak’azdli Whut’en Chief looks beyond COVID-19

“One day it will be over,” says Aileen Prince

Operating Room nurse Tammy Solecki, Clinical Practice Leader Joanne George, and Orthopedic Surgeon Dr. Van Zyl, stand alongside new equipment G.R. Baker’s shoulder surgery extension. (Submitted photo)
New shoulder surgery program at G.R. Baker Hospital in Quesnel already getting rave reviews

The $200,000 program could support nearly 100 surgeries a year at G.R. Baker Memorial Hospital

People skate on a lake in a city park in Montreal, Sunday, January 10, 2021. THE CANADIAN PRESS/Graham Hughes
The end of hugs: How COVID-19 has changed daily life a year after Canada’s 1st case

Today marks the one year anniversary of COVID-19 landing in Canada

Wet’suwet’en supporters and Coastal GasLink opponents continue to protest outside the B.C. Legislature in Victoria, B.C., on Thursday, February 27, 2020. THE CANADIAN PRESS/Chad Hipolito
‘We’re still in it’: Wet’suwet’en push forward on rights recognition

The 670-km Coastal GasLink pipeline was approved by B.C. and 20 elected First Nations councils on its path

Dr. Penny Ballem, a former deputy health minister, discusses her role in leading B.C.’s COVID-19 vaccination program, at the B.C. legislature, Jan. 22, 2021. (B.C. government)
B.C. holds steady with 407 new COVID-19 cases Tuesday

14 deaths, no new outbreaks in the health care system

B.C. Premier John Horgan speaks at B.C. legislature on the province’s mass vaccination plan for COVID-19, Jan. 22, 2021. (B.C. government)
COVID-19 quarantine not an option for B.C., John Horgan says

Apres-ski parties increase risk, not interprovincial travel

Worker at Swartz Bay terminal on Monday, January 20, 2020. (THE CANADIAN PRESS/Chad Hipolito)
Former BC Ferries employee alleges he was fired because of his race

Imraan Goondiwala has been granted a BC Human Rights Tribunal hearing

Cannabis bought in British Columbia (Ashley Wadhwani/Black Press Media)
Is it time to start thinking about greener ways to package cannabis?

Packaging suppliers are still figuring eco-friendly and affordable packaging options that fit the mandates of Cannabis Regulations

Rodney and Ekaterina Baker have been ticketed and charged under the Yukon’s Civil Emergency Measures Act for breaking isolation requirements in order to sneak into a vaccine clinic and receive Moderna vaccine doses in Beaver Creek. (Facebook/Submitted)
B.C. couple who travelled to Yukon for COVID vaccine ineligible for 2nd dose until summer

Health officials planning new measures to ensure people verify where they live before inoculation

(File)
Mask dispute in court leaves Vancouver cop with broken leg

Man allegedly refused to put on a mask and resisted arrest

(Kraft Dinner/Twitter)
Kraft Dinner launches candy-flavoured mac and cheese just in time for Valentine’s Day

Sweet and cheesy treat will be here just in time for the cheesiest holiday of the year

SAR crews worked late into the night Tuesday to rescue an injured snowboarder in North Vancouver. (Facebook/North Shore Rescue)
Complicated, dangerous rescue saves man in avalanche near Cypress Mountain

North Shore SAR team braves considerable conditions to reach injured snowboarder

Most Read