The COVID-19 pandemic brought financial turmoil to thousands of Canadians. In October 2020, a third of Canadians thought that financially recovering was unattainable. In 2020, thousands of Canadians experienced insolvency. There were no trends by age or gender. Literally, anyone was susceptible to insolvency during the pandemic.
Notably, Canadians aged 35 to 39 experienced a higher rate of insolvency at 13%. However, insolvency wasn’t over-proportionately seen in only that age group. For example, 15.2% of Saskatchewan’s insolvency filings were from people aged 40 to 44. While 12.1% of British Columbia’s insolvency filings were from people aged 65 or older. Interestingly, younger Canadians experienced less insolvency overall. But this may be because they have not yet acquired a ton of debt. A sizable portion of people aged 25 to 34 declared insolvency at a rate of 19.9%. Even though there are spikes, insolvencies occurred in all age groups and genders.
In other words, insolvency doesn’t discriminate in Canada. Financial hardship affects people of all genders and age groups. Considering that everyone is at risk, we should all take a moment to reposition our finances. In this guide, we’ll cover how to recover from COVID-19 financially.
What new opportunities are happening in Canada?
Despite the mass job loss Canada experienced in 2020, new opportunities arose. Many Canadians became more entrepreneurial in the face of job loss. In Ontario alone, 11,000 new businesses registered.
Unfortunately, many industries declined because of the COVID-19 pandemic. The oil and gas, travel and restaurant industries suffered immensely for instance. However, other industries experienced growth. Switching to a blossoming industry is a wise choice if you lost your job or incurred suffrage.
Canada experienced growth in the e-commerce and healthcare industries. This likely occurred due to in-person shopping restrictions. In addition to the increased need for medical products like masks and sanitizer. The telecommunications industry experienced a boom as well. With an increased need for digital communications.
The manufacturing industry also grew. Particularly with an increase in demand for consumer goods. Shortages of medical supplies and construction goods occurred. Both of these shortages contributed to the manufacturing industry boom. Existing businesses became innovative and creative to help meet the new demand. Many companies produced items they never did before. For example, cosmetic companies, alcohol companies and breweries began producing sanitizer. They already had alcohol as a raw material which enabled them to do this.
The IT, engineering, customer service, architecture, news, and publishing industries also saw unique growth throughout the pandemic.
Relocating Within Canada
With the economic shutdown, Canadians living in expensive, metropolitan cities migrated. More specifically, they relocated to affordable, greenery-rich regions. In fact, Toronto experienced a population loss of approximately 50,000 people. Whereas smaller regions, like Oshawa and Kitchener-Waterloo, experienced population growth. This indicates people’s preferences for housing are changing.
The GTA wasn’t the only region to experience this phenomenon. Suburban neighbourhoods in British Columbia anticipate population growth. For example, Pitt Meadows, Ladner and Maple Ridge. People in Vancouver will likely leave the city in search of a better cost of living and more space. The trends were less obvious in BC than in Ontario due to less harsh lockdowns and restrictions.
Out-of-province buyers continue to contribute to increases in housing sales. In the Maritimes, cities like Moncton, Halifax, and St. John experienced growth. Many Canadians are acting on their desire for more space and greenery. In addition, affordability is a big consideration. People no longer want to live in expensive regions if they don’t have to for work.
One way to recover financially from COVID-19 is to consider relocating. This is especially true if you live in urban areas like Toronto, Montreal or Vancouver, but do not need to for work.
Tips for recovering from an economic downturn
Relocation and industry switches might not be feasible for everyone. Many people experienced greater debt levels than ever before. Fortunately, there are other ways to jump-start economic recovery from COVID-19.
Negotiate your Bills and Interest Rates on Debt
Creditors know that thousands of Canadians experienced financial hardship due to the pandemic. Asking to negotiate bills or for a reduced interest rate won’t come as a surprise. Many banks have offered low-interest rates on loans and mortgages too.
Contact your creditors and ask for accommodation. Remember, some payment is better than no payment when financially recovering is your goal. This is your bargaining chip. Be sure to mention your strengths, such as strong payment history and high credit. If you can’t get a deal with your providers, consider shopping elsewhere for a better deal.
The federal and provincial governments spent money to provide Canadians with financial relief. Conduct some research to see if you’re eligible for any government support.
Budget, Budget, Budget
Only half of Canadians have a budget. Ironically, a budget is among the most important factors to strong financial health. This remains true for recovering from the economic effects of COVID-19. In fact, it’s more essential to have a budget during tough economic times.
Start by writing out your income and expenses. From there, you can determine how to bring more money in. Also, consider cutting costs where possible.
How to prepare for the next economic downturn
The complete shock occurred from COVID-19. Although, the economic downturn isn’t a new phenomenon. Recessions or depressions normally occur every 5 to 10 years. Canada’s last recession occurred during the 2008 Financial Crisis. Certain provinces and territories also experience cyclical economic activity. For example, Alberta’s oil and gas industry. Most recessions last between 3 and 9 months, so it’s easier to prepare than you’d think.
An emergency fund is a great way to help you deal with unexpected financial distress. Consider setting aside a certain percentage of your paycheque each month. A healthy emergency fund contains enough cash to cover 3 to 9 months of expenses.
Recessions destroy entire industries. But they also create new ones. It’s important to keep yourself rich with transferable skills. Adopt a lifelong learner mentality and continue to spend time growing your skills.
Investments have a short-term negative impact during a recession. However, in the long run, investments are almost always profitable. Begin investing to ensure you’re financially stable in the long run.
Financial crises are stressful and destructive, but they never last forever. A little financial preparation goes a long way. Invest regularly, build your skills, and adopt a saving mentality. Prepare for the worst and hope for the best!
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