{"id":988,"date":"2021-01-15T05:11:40","date_gmt":"2021-01-15T05:11:40","guid":{"rendered":"https:\/\/www.thomascchan.com\/old\/?p=988"},"modified":"2021-01-15T05:11:41","modified_gmt":"2021-01-15T05:11:41","slug":"7-financial-challenges-to-expect-for-canadians-in-2021","status":"publish","type":"post","link":"https:\/\/www.thomascchan.com\/old\/7-financial-challenges-to-expect-for-canadians-in-2021\/","title":{"rendered":"7 Financial Challenges to Expect for Canadians in 2021"},"content":{"rendered":"\n<h1>7 Financial Challenges to Expect for Canadians in 2021 and What To Do About It | Insights from a Financial Consultant<\/h1>\n\n\n\n<figure class=\"wp-block-embed-youtube wp-block-embed is-type-video is-provider-youtube wp-embed-aspect-16-9 wp-has-aspect-ratio\"><div class=\"wp-block-embed__wrapper\">\n<div class=\"ast-oembed-container\"><iframe loading=\"lazy\" title=\"[Get Ready] What will HAPPEN in 2021 | My SEVEN 2021 predictions\" width=\"500\" height=\"281\" src=\"https:\/\/www.youtube.com\/embed\/3aGcQxGXiek?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture\" allowfullscreen><\/iframe><\/div>\n<\/div><\/figure>\n\n\n\n<p>COVID-19 brought a lot of unexpected financial challenges for many Canadians and while we enter 2021 with new optimism, here are 7 financial challenges that we should expect in 2021 and how to best prepare for them. If you\u2019re new to my blog, my name is Thomas and I have been a financial consultant for over 10 years helping Canadians with retirement, wealth and insurance. If you\u2019d like a complimentary consult to discuss your personal finances and see how I can help you, please reach out and <a href=\"mailto:thomaschan@novellawealth.com\">book a time with me<\/a>.&nbsp;<\/p>\n\n\n\n<p>No one is going to forget about the year 2020 due to COVID-19 and let\u2019s be honest, it\u2019s going to impact us into 2021 and even longer. How much can we expect it to continue to impact us though? Let\u2019s dive in.<\/p>\n\n\n\n<h2>This is the new normal&nbsp;<\/h2>\n\n\n\n<p>Some people will try to reject this as the new normal. But the reality is, many of the changes that came about in 2020 are here to stay. Yes, COVID-19 will be gone hopefully soon but the effect is permanent and we are entering a new era. We have already seen a shift in how businesses work and operate. Business owners are forced to have their employees work from home. Remote teams is the new buzzword and it\u2019s likely going to stay.&nbsp;<\/p>\n\n\n\n<p>At the same time, we also saw a spike in cybersecurity issues. With more and more people working online this will likely stay as a part of our lives. A whole new \u201cnormal\u201d of life has evolved from 2020 and not everything will go back to how it used to be.&nbsp;<\/p>\n\n\n\n<h2>Goodbye mom and pop shops&nbsp;<\/h2>\n\n\n\n<p>2020 was already extremely difficult for the little corner shops on the street and unfortunately, we expect to see more closures from our favourite small businesses in 2021.<\/p>\n\n\n\n<p>The transition into the digital age continues. Restaurants are only doing delivery and take out. Physical stores are transitioning to ecommerce and teachers continue to hold classes through Zoom.&nbsp;<\/p>\n\n\n\n<p>Just check out the malls nearby. Retailers are filing for bankruptcy or they\u2019re focusing on online sales which small shops are unable to keep up with this. Small businesses do not have the cash flow nor the time and resources to transition. According to a Toronto town report, already <strong>37% <\/strong>of local mom and pop shops were unsure if they would recover from the effects of the pandemic. The reality is, the businesses that cannot adjust to the new ways likely won\u2019t survive.&nbsp;<\/p>\n\n\n\n<h2>Insurance Premiums Skyrocket&nbsp;<\/h2>\n\n\n\n<p>Insurance for Canadians is getting more expensive due to two reasons:&nbsp;<\/p>\n\n\n\n<ol><li>During the pandemic, more and more life and health cases have been claimed and when the more is claimed, insurance premiums skyrocket. The demand increases so the price increases.&nbsp;<\/li><li>Insurance companies collect the premiums and mainly invest in fixed income such as savings, term deposits and mortgage lendings. However, with lower interest rates, the fixed income isn\u2019t yielding enough. When it comes to life insurance, the data shows that compared to 2019, individual life insurance saw a<strong> <\/strong>significant bump in April and May of 2020. Well, in April and May this can be explained as natural volatility. But now that we are facing a second and third wave of COVID-19, it\u2019s a good idea to watch the trends.&nbsp;<\/li><\/ol>\n\n\n\n<p>The good news is that in Canada, life insurance plans are grandfathered. There is a contractual obligation for premiums to never increase once set in place. So, if you already have life insurance, then you are relatively safe.<\/p>\n\n\n\n<p>But what about people who don\u2019t have life insurance?&nbsp;<\/p>\n\n\n\n<p>I\u2019d urge everyone to think about it now rather than later. Set up a time with me if you\u2019d like to discuss options available for you.&nbsp;<\/p>\n\n\n\n<h2>A wider wage gap<\/h2>\n\n\n\n<p>2020 has only widened the wage gap. The pandemic has harmed many many industries, <strong>especially<\/strong> in the food and small retail business industry. It\u2019s also affecting the middle class,&nbsp;as <strong>office jobs are disappearing.<\/strong> Companies realize that remote teams have potential&nbsp;but for now, they need to focus on saving money, so they are downsizing and letting people go. Think about it, if this continues, people will have a harder time to find jobs, and with diminishing income adds a new layer of pressure to find a job, even if it\u2019s not the one they want. Let\u2019s assume that with the help of the vaccine, everything goes back to normal. But then we\u2019ll see an increased amount of people job hunting which increases the competition.&nbsp;<\/p>\n\n\n\n<p>While some sectors are suffering, it\u2019s not bad for everyone. For those in tech or those who have the skillset to work online, their income has improved. So the <strong>wage gap will widen <\/strong>as some industries and sectors will fall while others thrive.&nbsp;<\/p>\n\n\n\n<h2>People forced to retire<\/h2>\n\n\n\n<p>A report in June says that <strong>74% of Canadians<\/strong> will retire before the age of 65.&nbsp;<\/p>\n\n\n\n<p>The report also indicates that retiring early was already a trend before the pandemic.<\/p>\n\n\n\n<p>But the pandemic has sped up the process for many. Business suddenly disappeared or&nbsp;people were let go by their employer. This is a very unfortunate fact that some have been forced to retire. And in 2021, I believe even more will face it. Without income, it sometimes would make better sense to take benefits early. It makes sense to seek help<strong> <\/strong>to figure out&nbsp;<a href=\"https:\/\/www.thomascchan.com\/old\/reinventing-retirement-planning\/\">how to adjust<\/a> and how to make it through the situation.<\/p>\n\n\n\n<h2>Cost of essentials increase<\/h2>\n\n\n\n<p>Locally, the cost of goods increases. Especially restaurants have to raise their prices&nbsp;to make up for their shrinking customer base. The price of food will likely go up. In October, a report from Dalhousie University indicated that food prices all over Canada will increase by <strong>2-4%<\/strong>. The average Canadian family will spend $12,667 on their groceries a year, which is <strong>$487 more than in 2019. <\/strong>Just<strong> <\/strong>go<strong> <\/strong>to the grocery store near you and&nbsp;check how much the meat and toilet paper increased in price. Or, pay a visit to your local food court and compare the prices to last year\u2019s.&nbsp;<\/p>\n\n\n\n<h2>Taxes will jump (Like a lot!)<\/h2>\n\n\n\n<p>The Canadian government spent over 150 billion to keep people and businesses to stay afloat, but who&#8217;s going to pay the bill? A recent article on Ottawa News stated that&nbsp;the government expects the country\u2019s deficit to reach<strong> $381.6 billion by the end of the pandemic<\/strong>. If widespread lockdowns return, we are talking about $400 billion.&nbsp;The government is doing this to support and protect people, which is a good thing.&nbsp;But who is going to pay the bill? The consequences will likely be <strong>higher taxes for all of us<\/strong>. Now what they can do, they can charge a higher capital gain tax on your investment. Instead of 50% of capital gain will be taxed, they can move to 75% or 100%. And another one that I can think of is the government can remove the principal house exemption. Where even if you sell your principal residence you still have to pay tax!<\/p>\n\n\n\n<h2>What You Can Do Today<\/h2>\n\n\n\n<p>I\u2019m not sharing these to make 2021 look hopeless but instead to share these insights so you know what to expect and how to prepare for it.&nbsp;<\/p>\n\n\n\n<p>1. Save much much harder<\/p>\n\n\n\n<p>In tough times, cash is king so become a stricter saver. If your job doesn\u2019t provide enough money to save anything, then get a part-time job and look for opportunities to bring in additional income. Now is the time to <strong>hold onto <\/strong>as much money as you can,&nbsp;and invest somewhere that gives you a return! Build that emergency fund as you don\u2019t know what 2021 may bring.&nbsp;<\/p>\n\n\n\n<p>2. Invest in yourself<\/p>\n\n\n\n<p>If your job is in danger because of the pandemic then it\u2019s time to branch out. We are shifting from labour economy to skill economy! The more problems you solve, the richer you are!&nbsp;My suggestion? Read books, maybe even take a course and know which skills are in demand right now. Absorb as much information as you can. Besides learning a new skill,&nbsp;you can also work on monetizing a hobby or skill you already have. Yes, at the beginning you might find yourself uncomfortable but there will be a time that this will scale and you\u2019ll be happy that you invested time, money, and knowledge in yourself.<\/p>\n\n\n\n<p>3. Rethink your emergency plan<\/p>\n\n\n\n<p>Think about how well you are prepared for what\u2019s to come. Do you have an emergency fund? If not, start building one now. I always recommend have at least 3 months of savings&nbsp;somewhere that is easily accessible. Are you in debt? If yes, what can you do to stay afloat?&nbsp;Reach out to people who can teach you strategies to deal with debt that suits your needs.<\/p>\n\n\n\n<p>4. Get life insurance&nbsp;<\/p>\n\n\n\n<p>Do you have <strong><a href=\"https:\/\/www.thomascchan.com\/old\/canada-life-offers-special-promotion\/\">life insurance<\/a><\/strong> in case anything happens? This is crucial as premiums will rise soon. But if you take care of your life insurance now, you can lock both your payment and health.&nbsp;<\/p>\n\n\n\n<p>5. Focus on the right things&nbsp;<\/p>\n\n\n\n<p>Finally, are you <strong>focusing<\/strong> on the right things or are you stepping over dollars to save a few pennies? Yes, I said you want to be a more aggressive saver in this time but saving pennies won\u2019t get you anywhere. Just make sure to have emergency savings and supplement your income with an additional income stream.&nbsp;<\/p>\n\n\n\n<p><\/p>\n\n\n\n<p>What do you think? Are you prepared for these financial challenges if they arise? Let me know in the comments below. If you enjoyed learning more about building wealth and finance for Canadians, please subscribe to my YouTube channel where I post new videos weekly <a href=\"https:\/\/www.youtube.com\/thomascchan?sub_confirmation=1\">here<\/a>. <\/p>\n","protected":false},"excerpt":{"rendered":"<p>7 Financial Challenges to Expect for Canadians in 2021 and What To Do About It | Insights from a Financial Consultant COVID-19 brought a lot of unexpected financial challenges for many Canadians and while we enter 2021 with new optimism, here are 7 financial challenges that we should expect in 2021 and how to best &hellip;<\/p>\n<p class=\"read-more\"> <a class=\"\" href=\"https:\/\/www.thomascchan.com\/old\/7-financial-challenges-to-expect-for-canadians-in-2021\/\"> <span class=\"screen-reader-text\">7 Financial Challenges to Expect for Canadians in 2021<\/span> Read More \u00bb<\/a><\/p>\n","protected":false},"author":2,"featured_media":991,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_uag_custom_page_level_css":""},"categories":[1],"tags":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v16.1.1 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>7 Financial Challenges to Expect for Canadians in 2021 | Thomas Chan<\/title>\n<meta name=\"description\" content=\"COVID-19 brought a lot of unexpected financial challenges for many Canadians and while we enter 2021 with new optimism, here are 7 financial challenges that we should expect in 2021 and how to best prepare for them.\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"7 Financial Challenges to Expect for Canadians in 2021 | Thomas Chan\" \/>\n<meta property=\"og:description\" content=\"COVID-19 brought a lot of 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