Pattie Lovett-Reid: Before you go to the polls, build a financial safety net


HUNTSVILLE, ONT. – Whether you want to go back to the polls or not, we are destined to do so in September.

The timeline, many argue, makes perfect sense, as the damage to many household balance sheets over the past year has been largely repaired.

Central banks around the world have printed huge sums of money, government tax programs have been overdone, and Canadians have less debt than before the pandemic. In fact, credit card balances have been paid off and many are sitting on buckets of money.

According to Statistics Canada, Canadians saved a surplus of $ 212 billion in 2020, compared to just $ 18 billion in 2019. Translated: This represents just over $ 5,000 in savings per person compared to just under $ 500 the previous year.

It’s a lot of itchy money.

The stock market has risen about 18% this year, the housing market is on fire, and although fear of the Delta variant persists, the feeling of financial euphoria has been only slightly compromised.

The government is betting that you will not put your money in the bank. Earning next to nothing in savings vehicles or guaranteed investment certificates alone will encourage Canadians to spend or even invest despite growing concerns about high valuations.

You could argue that the amount of stimulus injected into the system was excessive and while we don’t know for sure, we know it was extraordinary.

The average Canadian is probably feeling pretty well as the economy begins to warm up, immunization rates rise and the Canadian Recovery Benefit (BCR) extends beyond the election.

For small business owners who have benefited from government safety nets like loans and rent relief, the biggest issue for many is how Canadians will move from government support and savings to spending. silver.

Business owners are frustrated with trying to recruit employees to re-enter the workforce. On the surface it doesn’t seem like we have a labor shortage, we are still seeing 325,000 net jobs lost due to the pandemic. It’s not really a shortage of wages either. For the record, people have told me that they just won’t be going back to work until the summer is over and CRB is over.

Small business owners who cling to the lifeline of government support are worried about what will happen when the money dries up. Will alternatives like a five to 10 year zero interest loan program be part of the transition or even a GST exemption to encourage people to spend. More clarity is needed and business owners will listen carefully to platform plans.

What is on the horizon?

I hope Canadians recognize the unique opportunity they have to use the excess cash they have accumulated to pay down their debts. Now is the time to strengthen your household balance sheet. Be a little selfish and build yourself up financially.

In the short term, the government will continue to offer some support, central banks will continue to do their part in this low interest rate environment, and the massive accumulation of savings will provide Canadians with a unique opportunity to deploy that money wisely. .

Of course, there will be some who need more help than others. And a very real risk is that the virus will persist longer. Only a small portion of the world’s population is actually vaccinated while inflation is likely to rise.

At the end of the day, you can only control what you can actually control which is to use the huge amount of savings wisely according to your unique family financial situation.

The task of the next Parliament will not be smooth. We still have jobs to recover, sectors to rebuild and incentives to withdraw.

However, I believe that many Canadians welcome the reopening of economies and there is reason to be hopeful. Remember, you don’t have to support the economy on your own.

A more cautious approach may be to build for the future.

We have seen how the role of government has changed and its influence in society is increasing in a powerful way. At the same time, relations between the government and the country are unraveling and becoming increasingly difficult.

But we don’t need to complicate things too much. We will talk about high government debt levels, but nobody really cares about that right now, because every country in the world is in the same situation.

However, a word of warning: you cannot manage your household finances like the government does. Why? You just don’t have the same kind of safety net in place.

Now is the time to put that safety net in place.

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