COCHRANE— Planning for anything in the era of COVID-19 is difficult, to say the least.
Constantly shifting health regulations and social and travel restrictions have people feeling nervous and uncertain— Especially with regards to their finances.
But, there are small steps you can take to secure your financial future during the pandemic.
“Prepare a budget, prepare a cashflow” said Jeff O’Rourke, Chartered Professional Accountant and Chartered General Accountant at Jeffery J. O’Rourke Professional Corporation. “A budget, in the best of times, is a good tool for people to project flow. You’re putting a bunch of numbers down and you’re letting those numbers tell a story.”
O’Rourke said many of his clients, even the savvy financial ones, often approach him and insist they have those figures in their head, but they are often surprised when they put them down on paper.
“Cashflow is so important to small businesses. It’s important to people with low income, modest income, even high income, depending on debt load,” he said.
COVID-19 is an unpredictable element in people's lives now, and it is more important than ever to have a solid financial plan.
“Sit down and project out the next six months and know what happens. If someone gets sick— You hear the stories, they end up in the hospital, in the ICU, for two months. How would you survive that? Do you have the resources for your family to continue on even though something might happen to you?
“The budget is key. That is the key tool for individuals, for businesses, for individuals earning all levels of income,” he said. “Budget is king.”
O’Rourke said there are many tools online that will explain how to create a budget for those who have never done one before, but it’s often as simple as money coming in versus money going out and finding out what’s leftover.
Once you have a solid budget in place, keep an eye on your spending to make sure you stay close to those figures.
“The budget is the tool that you measure your actual expenditures against your cash coming in. Make sure that you’re on a path to achieve the result that the budget says at the end.”
Once you have a clear picture of your finances, you can decide a path forward. O’Rourke said it is a good idea to consult an accountant or financial planner for guidance or to answer any questions you might have.
O’Rourke also noted that a big financial stress for people is the upcoming tax season.
He noted many of his clients have expressed some anxiety over the benefits that the federal government doled out to help individuals and businesses during the COVID-19 pandemic.
“If people suspect that they may have received benefits and shouldn’t have, or if they may have done the calculations incorrectly, I would not recommend leaving it to when the provincial or federal government decides to knock on the door and take a look at what you’ve done. Go seek out professional help and review what you’ve done,” he said.
The government is doing its best to be understanding with people who may have miscalculated or accepted benefits in error, O’Rourke said, but the best course of action is to act in good faith, and own up to the error before the Canada Revenue Agency comes knocking.
“They’re being very understanding right now,” he said. “But eventually, it’s going to catch up with people, so you’re better to address things now.”
If you put your 2020 tax return together and find out that you owe, do not shy away from filing your return, O’Rourke said.
If you delay, you might have late penalties, and interest levied against you after April 30.
“File your taxes on time and make some kind of payment every month. That’s showing that you’re trying,” he said. “Confront it, don’t let that stress come at you. I can tell you that CRA [Canadian Revenue Agency] will work with people, just hit it head-on.”
People who acknowledge their debt might have an easier time working with the Canadian Revenue Agency to create some sort of payment plan, O’Rourke said.
This year’s tax deadline is April 30. As of now, the Canadian government has made no announcements regarding any extensions of the 2020 tax season.
