Stop Living Paycheque to Paycheque and Start Living

We are now living in a gig economy as a result of wage stagnation and increased globalization. While previous generations have usually worked one full-time job, often with a pension plan, today more and more Canadians are working for several different companies as independent contractors.

While this type of work does offer much-needed flexibility for some, it also creates financial instability for millions of Canadians. A recent survey of all working Canadians by the Canadian Payroll Association suggests that 43 percent of workers were living paycheque to paycheque prior to COVID-19. That statistic does not take into account COVID-19’s impact on the workforce.

Regardless of how we got here, the fact is that income volatility is a huge problem for almost half the country. Not knowing when or where your next paycheque is coming from can create a multitude of issues that can have lasting effects on both your health and your finances.

The Effects of Income Volatility?

A survey conducted by the Canadian Payroll Association in 2019 found that 40 percent of the Canadian population are so stressed about finances that it affects their performance at work.

The survey also found that 40 percent of Canadians said they were overwhelmed by the amount of debt they owe. And a whopping 75 percent of Canadians are saving less than 25 percent of their retirement goals.

Knowing that the problem exists is one thing, but if we want to understand the gravity of the situation, we need to know the implications of living paycheque to paycheque. Below are a few of the most substantial effects.

Financial Stress Can lead to Poor Health Outcomes

Living paycheque to paycheque increases financial instability and exacerbates stress, which can impact the cardiovascular system, degrade your mental health and other bodily functions. Worse, it can become a vicious cycle: You become stressed, so your health deteriorates, which causes you more stress, etc.

Conditions like depression and anxiety can go into overdrive when you experience financial instability, meaning that you have to work harder just to make it through each day.

How to Avoid Financial Stress in the Gig Economy

Make a Plan – This plan can be for six months, one year, or 10 years – whatever you want. The plan should include budgets, saving potential and job improvement. If you’re making incremental steps forward, that should help you relieve some anxiety about the future.

Save Anything – Whether it is $5 or $500, every dollar counts. You may not think it’s much, but it will add up overtime.

Avoid Accruing More Debt – Although this plan is easier said than done, it is sometimes better to pay less on your debt and save more money so that you don’t borrow more when something unexpected happens.

Invest in your Future – Start investing. Nowadays, there are many different options to consider when you think about investing your money. Whether you are a new or a seasoned investor, it is a good idea to make your money work for you.

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5 Top Financial Planning Strategies For Small Business Owners

Creating a financial plan for your business is critical not only for your business’ survival but also for its growth. However, many small business owners struggle to create a comprehensive financial plan that considers all of the financial needs of the business – which should include long term growth goals and contingency plans for any unexpected circumstances. Below, we have compiled a list of the strategies business owners should start with when considering a comprehensive financial plan.

Access To Capital And Debt Management

Talk to a professional when your business needs access to capital – especially if you have just opened your doors. Many new companies do not qualify for traditional, low-interest loans, and some new business owners mistakenly turn to loans with high-interest rates. This can turn out to be a problem for the business in the long-run. If sales are slow at the beginning, then the company could struggle with repaying its debt. It is a good idea to explore all loan options with a professional when you are considering options to raise capital to expand your business. Any financial plan should include ways of accessing capital that won’t cripple your business in the long run.

Favourable Tax Strategies For Your Business

We get it. Business owners are often too busy to research the most favourable tax strategies available to them. However, paying more in taxes can be avoided. Examining different tax strategies with a professional could free up cash and allow the business to achieve its maximum growth potential.

Prepare For The Unexpected

As 2020 has taught us, anything can happen. Regardless of the external or internal circumstances, your business should be prepared. It is a solid financial strategy to develop a contingency plan that will allow your business to adapt to new circumstances.

Do you have a key employee or employees that you rely on to run the business? What would happen if they became ill? What if something happened to you? Would your family still receive an income? Luckily, there are insurance policies designed to protect your business and family in the event that any of these possibilities become an unexpected reality.

Prepare For The Expected, Too

Most of us will want to retire at some point. But how do you plan on transitioning out of the business and into retirement? Many successful business owners understand the importance of having a retirement plan for themselves and their spouse independent from the business. Take a moment and jot down some retirement goals to get a general idea of what your retirement will look like for you. Do you plan on passing the business down to your children? At what age would you like to retire? A good financial plan will help you to retire when you want and how you want.

Protect Your Assets From A Lawsuit

Let’s face it. These days lawsuits happen more frequently than business owners like to admit, so it is a good idea to be prepared. When designing a financial plan, investigate what type of liability insurance would be best to protect your small business. Would general liability insurance suit your needs? Or would you be better suited for a professional liability insurance plan?

This is certainly not a complete list of all the main strategies that a financial plan should include, but it is a starting point to work from. Please don’t hesitate to reach out if you think we can help develop a financial plan for you and your business.

As usual, please feel free to share this article with anyone you think might find it of interest.

CEBA extended to October 31st. Expanded to include more businesses.

On August 31st, Deputy Prime Minister and Minister of Finance Chrystia Freeland announced the extension of the Canada Emergency Business Account (CEBA) to October 31st, 2020. This will give small businesses 2 additional months to apply for the $40,000 loan.

In addition, the Federal Government said it was working with financial institutions to make the CEBA program available to those with qualifying payroll or non-deferrable expenses that have so far been unable to apply due to not operating from a business banking account.

Apply online at the financial institution your business banks with: