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

There still has been no arrests and the investigation is ongoing into the deaths of Nellie Williams and Fran Shurie on Christmas Eve, 2019. Police are asking for the public’s assistance in solving the crime. This memorial, located near Trunk Road and Canada Avenue where the crime occurred, still stands at the site of the double homicide. (Robert Barron/Citizen)
Investigation continues into Duncan double murder

Police ask anyone with information on Christmas Eve, 2019, crime to contact them

An Island Health graph showing COVID-19 cases in the central Island by local health area between Dec. 27 and Jan. 23. (Island Health image)
Central Island’s COVID-19 case spike shifting, says Island Health

Cowichan Valley has seen the highest number of cases, but Nanaimo and south Island seeing upticks

Extensive water on No. 4 and 5 at the Mount Brenton Golf Course following heavy rains earlier this month. (Photo submitted)
Mount Brenton Golf Course does a booming business in 2020

A total of 15,000 more rounds played than the previous year

The memorial site for double-murder victims Nellie Williams and Fran Shurie, located in Charles Hoey Park, will be allowed to stay for another two months after the City of Duncan changed its policy on temporary memorials. (Robert Barron/Citizen)
Duncan allows temporary memorials to stay longer

Policy change related to memorial for double-homicide victims in city park

British Columbia Health Minister Adrian Dix looks on as Provincial Health Officer Dr. Bonnie Henry addresses the media during a news conference at the BC Centre of Disease Control in Vancouver B.C. (THE CANADIAN PRESS/Jonathan Hayward)
B.C. announces 485 new COVID-19 cases, fewest deaths in months

‘The actions we take may seem small, but will have a big impact to stop the virus,” urges Dr. Henry

Keith Thorpe/Peninsula Daily News
Search called off for small plane that went down in rough water south of Victoria

Plane bound for Port Angeles from Alaska believed to have one occupant, an Alaskan pilot

Cannabis bought in British Columbia (Ashley Wadhwani/Black Press Media)
Is it time to start thinking about greener ways to package cannabis?

Packaging suppliers are still figuring eco-friendly and affordable packaging options that fit the mandates of Cannabis Regulations

Royal B.C. Museum conservator Megan Doxsey-Whitfield kneels next to a carved stone pillar believed to have significance as a First Nations cultural marker by local Indigenous people. The pillar was discovered on the beach at Dallas Road last summer. Museum curatorial staff have been working with Songhees and Esquimalt Nation representatives to gain a clearer picture of its use. (Photo courtesy Royal BC Museum)
Stone carving found on Victoria beach confirmed Indigenous ritual pillar

Discussion underway with the Esquimalt and Songhees about suitable final home for the artifact

Former Vancouver Giants forward Evander Kane is seen here in Game 7 of the second round of the 2009 WHL playoffs against the Spokane Chiefs (Sam Chan under Wikipedia Commons licence)
Gambling debts revealed in details of bankruptcy filing by hockey star Evander Kane

Sharks left winger and former Vancouver Giants player owes close to $30 million total

Othman “Adam” Hamdan, pictured in front of Christina Lake’s Welcome Centre, was acquitted of terrorism related charges in 2017. He has been living in Christina Lake since November 2020. Photo: Laurie Tritschler
Man acquitted on terrorism charges awaits deportation trial while living in Kootenays

Othman Ayed Hamdan said he wants to lead a normal life while he works on his upcoming book

B.C. Premier John Horgan wears a protective face mask to help prevent the spread of COVID-19 prior to being sworn in by The Honourable Janet Austin, Lieutenant Governor of British Columbia during a virtual swearing in ceremony in Victoria, Thursday, November 26, 2020. THE CANADIAN PRESS/Jonathan Hayward
Premier Horgan calls jumping COVID vaccine queue ‘un-Canadian’

Horgan says most people in B.C. are doing their best to follow current public health guidelines

Prime Minister Justin Trudeau, left, and Vancouver Mayor Kennedy Stewart share a laugh while speaking to the media before sitting down for a meeting at City Hall, in Vancouver, on Friday August 30, 2019. (THE CANADIAN PRESS/Darryl Dyck)
Vancouver mayor, Health Canada to formally discuss drug decriminalization

Kennedy Stewart says he’s encouraged by the federal health minister’s commitment to work with the city

Downtown Fernie is pictured after a snowfall.

Most Read