Many Canadians are facing a tough time financially. People are dipping into their savings or emergency funds to make ends meet. An even more startling statistic: over half of Canadians have an emergency fund of less than $200. That’s a precarious situation to be in. Job loss or other unexpected expenses can quickly throw someone off track financially. If you’re running out of your emergency money, here are a few things you can do to help manage your life expenses.
Government assistance programs when you’re running out of emergency money
There are a few government assistance programs that provide financial support. If you’re relying on emergency money to get by and need support, these can help you get back on your feet.
Emergency financial assistance
Alberta and Ontario have provincial assistance programs in place.
Alberta provides an Emergency Needs Allowance. This covers essentials like food, shelter, utility arrears, and eviction payments. Depending on the situation, some of these costs may need to be repaid at a later date.
Ontario provides emergency assistance for up to 48 days (or longer if needed). Single individuals may receive approximately $733 per month towards food and shelter.
Social assistance benefits
All provinces have basic income programs that provide support for necessities. This program covers basic needs, plus additional support based on your situation. This additional support can include child benefits, disability benefits, and more. You can also receive support with refundable tax credits or a back-to-school allowance for your dependent children. The amounts can vary based on your situation. However, if you’re trying to make ends meet with your emergency money, every dollar counts.
Your local social assistance office can help you determine whether you qualify. Depending on the situation, short-term and long-term benefits are available. Amounts vary between provinces and territories—check with your local office.
Employment insurance
Employment insurance, or EI, is a federal program. Their goal is to support people who are unemployed or (in some cases) unable to work. EI provides income support via temporary financial assistance. This support can help people make ends meet while they’re looking for gainful employment or upskilling.
All these programs are useful for varying economic situations. It’s important to be aware of any rules around making money while being paid out by any government programs. For example, how much money you get via EI will depend on how much money you’re bringing in otherwise.
Financial strategies to use emergency money wisely
If your emergency money is running out, things can be hard to handle. It becomes more difficult if you have previously been living paycheck to paycheck. Here are some strategies you can use to manage your expenses:
Talk to creditors for deferred payment options
If you have ongoing loans or a mortgage, you may find it difficult to keep up with your previous due amount immediately. Lenders are willing to work with you to find a plan that works for you. Let them know your situation and be honest about how you intend to make future payments. Many lenders offer deferral options that can help you until you can find employment.
Keep in mind, it’s better to use these measures before you need them. For example, if someone has maxed out their credit cards already, they will have a more difficult time getting approved for a line of credit. If you have bigger loans, like a mortgage, this is even more important. A mortgage lender will be more likely to defer payments or work out an arrangement if you just lost your job, rather than when you’re down to your last few pennies.
Tax-Free Savings Account (TFSA)
To replenish your emergency money, you can withdraw funds from a TFSA to avoid tax implications. If you have a Registered Retirement Savings Plan (RRSP) and a TFSA, it would be better to use your TFSA funds. If you use your RRSP, you may see tax impacts and may permanently lose your contribution room. Be careful when considering RRSP withdrawals.
Manage emergency money carefully
Cut down on your spending
The first thing you can implement is to spend less. Reduce your discretionary spend by cutting down on non-essentials. Sell things you have at home that you no longer use – the second-hand market is quite active! Cancel subscriptions, or rotate through them, so you’re only paying for what you want at the time. This can help you stretch your dollars further, and you don’t have to use more of your emergency money than needed.
Look into the loud budgeting or underconsumption core movements. “Repair, reuse, and reduce” is also good to keep in mind. You’ll save money while also being more sustainable. Good for your budget and your community! If it’s difficult to stick to a budget, consider managing your cash flow instead.
Increase your income
While you apply for jobs in your field, you can make money to support your living expenses in the short term. There are options like gig work, part-time work, or freelance projects. If you’re interested in temp jobs, reach out to a temp agency and let them know you’re available. Another option is to try to monetize a hobby for the short term to tide you over. For example, you can create things to sell online or in person. If you’re handy, you could repair things for people in your community.
Line of Credit
If you must borrow money to make ends meet, consider a line of credit (LOC) for a relatively lower interest credit option. If you own your own home, you may also consider a Home Equity Line of Credit (HELOC). Choose carefully, especially considering that a HELOC means your home is the collateral. Avoid credit cards with high interest rates and payday loans. They should be an absolute last resort. It becomes very risky if you don’t have money coming in, and you certainly don’t want to be using your emergency money to pay high interest rates!
Additional resources
- Community resources, food banks, shelters, and charities assist with food and housing.
- Budgeting apps or tools can help you see where your money is going. This can make it easier to stay on track.
- Provincial programs. Check to see what your province offers, whether you qualify, and how you can apply.
- Avail other support programs you may qualify for, like child care subsidies or disability benefits.
Future finances
A combination of the strategies above can help tide you over in the short term. It should be a good starting point, or give you some ideas on how you can handle your finances better without going into debt to buy groceries. The long-term solution here is to find gainful employment. There are government resources and programs to support job readiness. You may also use this time to upgrade your skills via courses or certificates, many of which you can find for free online.
Once you’ve achieved your goal of a good job, you can pay off any loans or LOC you may have used. You could also stop the part-time work or hobby sales once you feel financially comfortable. Of course, also work on rebuilding your emergency money fund! If you’re currently dealing with debt, you can contact one of our trained credit counsellors for advice – find out what debt solution could be right for you.
