Getting your finances in order for 2022

WELLINGTON COUNTY – With the pandemic impacting the lives of both employers and employees, it is important that people take time to review changes to their finances.

Committing to saving money, monitoring goals, and setting a budget can help people stay on track.

“Monitor your investments, do monthly contributions to your RRSPs, start early, and pay yourself first,” said Ted Ecclestone in an interview with the Advertiser.

Ecclestone, a financial advisor with Manulife Securities Inc., said the biggest thing he sees with younger people is they don’t save any money because they don’t think it’s going to be meaningful.

“The biggest thing I find is the first $1,000 that somebody saves, that’s a pretty big commitment,” Ecclestone said.

“The next $10,000, once you get there it’s like, wow, that’s a long way to go. And the more they can see their investments growing, the more confident they are with their own strategy.”

Budget wisely

“People should look at budgeting and figure out what they spent last year as well as what they saved last year, and then look at the new year as new,” said Kathie Butcher, a financial advisor at Sun Life Financial in Harriston.

“People should figure out what it is they need to change, and what their goals are, and what they’re doing for the year.”

Butcher said these strategies are important for people to implement even in difficult times, like during a global pandemic.

“It can be tough, with COVID, but on the other hand, this is life,” Butcher said. “Change is a big thing for people. People don’t like change, but to make things work, you kind of have to go with the flow.”

Butcher said people should not necessarily be changing their contributions to their RRSPs and other savings plans due to the pandemic.

“People aren’t spending as much money because they’re not going out or taking holidays,” she said.

“Let’s say a trip costs you a thousand dollars, and you didn’t take it. Then save that for the future. Put it in a TFSA and save it for future trips when you can get away.”

According to Butcher, one of the most important things people can do is organize their expenses into a budget.

“I think everybody should do a budget. I firmly believe that a budget helps people further where they want to go,” she said.

“Personally, I do a budget for our home expenses and I do one for my business expenses. It’s good for people to look at the bottom line of their paycheck and compare it towards their expenses and see if there’s a surplus.”

With inflation and the costs of goods rising, Butcher said it is still very important for people to save money if they can.

“People need to understand that their savings are a part of their expenses,” Butcher said.

“If the amount that you’re putting into your savings is working for you right now, then keep going with it.

“Adding another five or 10 dollars to your contribution here or there is not a bad thing.”

Businesses have also been facing hardship throughout the pandemic. Fortunately, there is aid available to them.

Because of new restrictions brought on by the Omicron surge, the federal government has temporarily expanded the eligibility of several support programs to employers who have seen a drop in revenue during the pandemic.

Employers may be eligible for a subsidy to cover part of the wages paid to employees to enable them to re-hire workers and help prevent further job losses.

These programs include:

– the Local Lockdown Program, which offers support to businesses under temporary new local lockdowns up to the maximum amount available through the wage and rent subsidy programs. This includes employers subject to capacity-limiting restrictions of 50% or more;

– Tourism and Hospitality Recovery Program, which provides wage and rent subsidy support to hotels, tour operators, travel agencies and restaurants with a subsidy rate of up to 75%;

– Hardest-Hit Business Recovery Program, which provides wage and rent subsidies to other businesses that have faced deep losses, with a subsidy rate of up to 50%; and

– Canada Recovery Hiring Program, which has been extended from its original expiry date of Nov. 20, 2021, to May 7, 2022. This program helps eligible employers who have experienced losses of over 10% in current revenue due to COVID-19. The subsidy rate has also been increased to 50%.

Butcher encouraged businesses to seek help if they need it.

“All you have to do is ask. There is help out there. I know people don’t tend to ask for help very often, but communities need to keep the businesses going,” she said.

“Local people have to realize that businesses are hurt by COVID and we all have to be understanding that hard times have happened and help out where we can.

“We’re all in COVID together. We need to ask for help if we need it, and we need to talk to people.”

Financial advice “more important than ever”

“Individual advice is probably more important than ever, as far as reviewing things,” said Dan Allen, a senior financial advisor at Manulife Securities Inc.

Allen said having a third-party financial advisor can help people look at their budget and look at where opportunities are to add to their wealth and cut back expenses to make their savings plans work.

“It’s not just retirement savings, it’s also education savings for kids, paying down debt, whatever those goals might be,” Allen said.

“I think it requires personalized advice more than ever, just because the circumstances are different through COVID,” he continued, adding that for some people, the pandemic is a good opportunity to catch up on retirement or education savings.

“There’s not as much eating out happening, and not as much travel happening, so it’s creating an opportunity for people to take that cash flow and catch up on savings plans that they maybe had been sacrificing in previous years,” he said.

To deal with inflation and rising costs of goods, Allen said it is important for people to assess where they are spending money unnecessarily.

“COVID has given us a chance to reassess where our money is going,” Allen said.

“In some cases, it’s looking at how much you spend on cell phones, and how much you spend on cable and entertainment in your home. Some of those things can be better packaged up and you can save some money and put it toward retirement or education savings.”

Joe McLaughlin, who owns McLaughlin Financial Group in Harriston, said the ultimate goal is to pay yourself first.

“Try to focus on paying yourself 10 per cent of your income first, before paying any other bills,” he said.

“Having your emergency fund has been critical this year. COVID has made people realize that having three or four months of income saved up is critical now.”

When it comes to saving, McLaughlin said the number one rule he tells clients is to save something. He said often people will spend money on vacations or for other leisure purposes, when they need to be putting some of that money away for retirement.

“When it comes to putting money away, I don’t care if it’s $25 per month. Start with that and try to increase your savings by 10 to 20 per cent per year, every year,” he said.

“The average Canadian is only going to make about $680 per month in retirement from CPP (Canada Pension Plan). So, the government is only designed to support 25 per cent of your needed income. The rest is going to come from you.”

McLaughlin said when it comes to saving money, many people don’t know where or how to start.

“Once you get used to it, you don’t notice it coming out of your bank account. So, it’s a matter of having a starting point.”