How Has the COVID-19 Pandemic Impacted Personal Finance?
Finance金融学Essay代写 In other instances, the pandemic made tenants vacate their premises and move to cheaper houses (Bogart, 2020).
After the outbreak of the COVID-19 pandemic, there have been significant negative economic impacts contributing to a reduction in financial security globally. There have been changes in livelihoods among individuals in Canada. Most people continue seeking help from the government through Canada Emergency Response Benefit (CERB) due to income instability, management of consumer debt, and loss of jobs. The onset of the pandemic saw the rise of prices of goods to help the government raise enough revenue to cover all the projects that require financing. Besides, the pandemic forced the Canadians to control their spending, CERB reliance, and rebuilding savings used because of the pandemic. Thus, the outbreak of COVID-19 affected people’s well-being because it impacted their finances directly.
Unstable Income
The outbreak of the pandemic resulted in income instability among individuals in Canada. For instance, Charnock et al. (2021) point out that partial or total closure of businesses worsened income situations in Canada, with about 46 percent of individuals having a maximum of 40,000 dollars and 3 percent of them having above 40,000 dollars. This unstable income makes it hard for many individuals to pay the minimum payment on daily basic needs and debts (Lloyd, 2020). Besides, the pandemic forced Canadian businesses to collapse, leading to reduced or loss of income, making it hard for individuals to pay for mortgages and rent (Bogart, 2020). The income imbalance made people depend on savings to survive and purchase goods and services for their families. Finance金融学Essay代写
In some cases, the unstable income forced individuals to rely on CERB entirely for survival. In other instances, the pandemic made tenants vacate their premises and move to cheaper houses (Bogart, 2020). This income instability created by the pandemic degraded people’s living standards and changed their lifestyles. As a result, the reduced income interfered with retirement plans, saving strategies, and increased financial stress.
Control of Spending Finance金融学Essay代写
The income reduction and uncertainties surrounding the financial situations of Canadians pushed them into formulating measures to ensure there is controlled spending. Some individuals in Ottawa believe that despite some of them losing jobs after the pandemic outbreak, they can pay their recurrent bills and debts because of reduced spending (Bogart, 2020). This strategy enables them to pay for what is necessary and direct their expenditure to crucial goods or services. Besides, some believe that saving experiences gained before the pandemic helped them to fit into the bracket of individuals forced to control their spending (Bogart, 2020). This idea shows that the pandemic’s push for individuals to control their spending significantly affected people on the upper side of the salary grid.
Managing Consumer Debt
The management of consumer debts became difficult when people lost jobs and incomes reduced after the pandemic. Lack of alternatives for sourcing finances contributed to increased borrowing and debts among Canadians. For instance, the survey done by the Credit Counselling Society shows that about 67 percent of Canadians have mortgages to pay in addition to other debts (Lloyd, 2020). Besides, individuals with non-mortgage debts rely on government support and use personal savings to survive (Lloyd, 2020). Although the Credit Counselling Society helps people manage their debts, the pandemic made it challenging to achieve this objective.
Moreover, it is difficult to manage debts since the inflation rate is rising during this pandemic period. Since 2003, Canada has not experienced the highest inflation rate, from 4.1 percent to 4.4 percent in 2021 (BBC, 2021). The increased inflation rates have affected groceries, housing, the transport sector, and gasoline. For instance, gasoline prices rose by 32.8 percent compared to 2020 prices (BBC, 2021). Despite the rising prices of essential goods, it is difficult to curb this rate immediately. Thus, it is hard for individuals to manage their consumer debt because the prices of goods are high, and they spend more and save less.
CERB Reliance Finance金融学Essay代写
With the pandemic’s upsurge in March 2020, the financial capabilities of individuals took a downward shift due to the loss of jobs and partial or total closure of businesses. The lost work hours and increased unemployment rates pushed the Canadian government to formulate measures that helped cushion the financial status of individuals. The establishment of the Canadian Emergency response Benefit (CERB) elevates the financial position of individuals and enables them to meet some crucial financial needs. More than half (53 percent) of the CERB recipients say they remained unemployed after the pandemic, could not find jobs after twenty-seven weeks of job-searching, and experienced difficulties paying for basic needs (Charnock et al., 2021). Since most Canadians are worried about the negative impacts of the pandemic on personal finances, they are relying on CERB as an alternative means to earn income and sustain themselves. Finance金融学Essay代写
However, relying on CERB as a long-term financial source interferes with Canadian economic growth. As much as CERB helps individuals meet their monthly needs, it also pushes the government to increase taxes and seek alternative means of funding its revenue since people are not contributing to economic growth. Besides, the continuous provision of financial benefits to consumers elevates the living standards of individuals in the short term and contributes to long-term economic degradation. This effect may emerge from the lack of individuals’ push to develop financial independence and consequent Canadian economic growth.
Loss of Jobs
The Canadians’ financial security dwindled after the pandemic outbreak, which has contributed to thousands of job losses across the country. Although the initial wave of the coronavirus affected recreation and education sectors, the subsequent waves led to significant job losses. For instance, the second wave of the pandemic contributed to about an 8.1 percent increase in unemployment rates represented by 207,100 jobs and more than the predicted level by 32,100 (Gordon, 2021). The country experienced 77,800 part-time and 129,400 full-time job losses (Gordon, 2021). Besides, the increased restrictions to curb the spread of the pandemic contributed to the significant loss of jobs because customers reduced revenue in hotels and the entertainment industry. Reduced operations on non-essential service delivery make many people stay at home, leading to unstable income and financial insecurity.
Rebuilding Savings that Have Been Used
The harsh financial heat felt since COVID-19 began spreading worldwide, leading to altered income streams and changed saving plans. The pandemic outbreak had significant effects on personal finance since people started to rely on personal savings and government support for survival. Besides, the unstable income experienced by the people made it hard to rebuild the used savings. The difficulty stems from increased cases of job losses and reduced income potential of individuals with the rising prices of goods. From the survey done by Credit Counselling Society, about half of the respondents have less than one month of savings for emergencies (Lloyd, 2020). Although the harshness felt during the pandemic, the government and other stakeholders must educate the public about saving plans and making sound financial decisions.
Moreover, receiving education on financial matters and saving will enable Canadians to cushion their financial obligations and become independent.
The move towards rebuilding their used savings allows the households to ease available vulnerabilities, enabling 80.7 percent of unnecessary expenditures (Charnock et al., 2021). Since the pandemic affected financially vulnerable families, coping with such difficulties requires government intervention to help create a sustainable effect among individuals.
Overall, the outbreak of COVID-19 has a direct impact on people’s well-being since it affects their finances. The pandemic outbreak has contributed to financial insecurity through a decline in income and increased reliance on CERB. Apart from enhancing people’s spending control, the pandemic has also increased unstable income and made it hard for individuals to manage their consumer debts and rebuild their savings. Thus, the coronavirus has contributed to more financial harm than good.
References Finance金融学Essay代写
BBC. (2021, October 20). Canada’s inflation rate hits a fresh 18-year high. BBC News. https://www.bbc.com/news/business-58986399
Bogart, N. (2020, May 26). “Two years of income up in the air”: How the pandemic has impacted canadians’ finances. Coronavirus. https://www.ctvnews.ca/health/coronavirus/two-years-of-income-up-in-the-air-how-the-pandemic-has-impacted-canadians-finances-1.4955334
Charnock, S., Heisz, A., Kaddatz, J., Spinks, N., & Mann, R. (2021, April 15). Canadians’ well-being in year one of the COVID-19 pandemic. Www150.Statcan.gc.ca. https://www150.statcan.gc.ca/n1/pub/75f0002m/75f0002m2021003-eng.htm
Gordon, J. (2021, May 7). Canada posts hefty job losses in April as third wave bites. Reuters. https://www.reuters.com/world/americas/canada-loses-207100-jobs-april-unemployment-rate-rises-81-2021-05-07/
Lloyd, M. (2020, December 2). CityNews. Vancouver.citynews.ca. https://vancouver.citynews.ca/2020/12/02/covid-19-personal-finances-debt-canadians/
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