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

The aftermath of Thursday morning’s car crash at Greenwood’s Deadwood Junction, Jan. 14. Photo courtesy of Midway RCMP
Midway RCMP looking driver who left crash outside Greenwood café

Cpl. Phil Peters said Mounties were called to the scene early Thursday morning, Jan. 14

A woman wearing a protective face mask to curb the spread of COVID-19 walks past a mural in Victoria, B.C., on Monday, Dec. 7, 2020. THE CANADIAN PRESS/Marissa Tiel
115 new COVID-19 cases, no new deaths in Interior Health

There are now a total of 4,970 cases in the region

Defence counsel for the accused entered two not guilty pleas by phone to Grand Forks Provincial Court Tuesday, Jan. 12. File photo
Grand Forks woman pleads not guilty to assaulting peace officers

The alleged assaults took place in March 2020

Powell River man pleads guilty to sexual interference of a minor in Grand Forks

The man is awaiting sentencing pending a psychological assessment

A woman wears a face mask and shield to curb the spread of COVID-19 while walking in North Vancouver, B.C., on Wednesday, January 6, 2020. THE CANADIAN PRESS/Darryl Dyck
536 COVID cases, 7 deaths reported as B.C. find its first case of South African variant

Henry said 69,746 people have received their first dose of the COVID vaccine.

Alan Davidson was sentenced to almost six years for abusing seven boys in the late 1970s and early 1990s. (Canadian Press file)
Full parole granted to former Mountie, sports coach convicted of sex abuse of boys

Alan Davidson convicted of abusing boys in B.C. and Saskatchewan in late ’70s, early ’90s

The first COVID-19 vaccine arrives in B.C. in temperature-controlled containers, Dec. 13, 2020. (B.C. government)
More vaccine arrives as B.C. struggles with remote COVID-19 cases

Long-term care homes remain focus for public health

The first Pfizer-BioNTech COVID-19 vaccine dose in Canada is prepared at The Michener Institute in Toronto on Monday, Dec. 14, 2020. THE CANADIAN PRESS/Frank Gunn
Doses of COVID-19 vaccine expected in 60 B.C. First Nations by next week

B.C. has allocated 25,000 doses of COVID-19 vaccine to First Nations for distribution by the end of February

Kamloops-South Thompson MLA Todd Stone questions the NDP government in the B.C. legislature, Feb. 25, 2020. (Hansard TV)
Todd Stone says he’s not running for B.C. Liberal leadership

Kamloops MLA was widely viewed as a front-runner

Wireless voice and data services are out for those on Telus as of Thursday (Jan. 14) afternoon across Western Canada, Telus Support said in a recent Tweet. (Black Press file photo)
UPDATE: Telus services restored across Western Canada

Telus said they are monitoring the situation to ensure connections remain stable

Screenshot from video.
2 students arrested in assault of transgender girl at Lower Mainland school

Mother says daughter was targeted because of how she identifies

Constable Ken Jaques broke a window and crawled into a home to rescue an elderly man who had be laying on the floor for days. Jaques was the officer who provided oversight for the 2020 Remembrance Day services and is shown here in a picture with his son. Photo Andrea DeMeer
Senior who fell and spent days lying on floor of home saved by Princeton cop

He broke the glass and crawled into the house, while calling for assistance from BC Ambulance

Luke Marston works on the seawolf mask for Canucks goalie Braden Holtby. (Mike Wavrecan photo)
B.C. Coast Salish artist designs new mask for Canucks goalie

Braden Holtby’s new mask features artwork by Luke Marston inspired by the legend of the seawolf

Most Read