Financial Literacy Newsletter - June 2020

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COVID-19: Managing financial health in challenging times

A word from the Financial Consumer Agency of Canada (FCAC)

Welcome to our spring edition of the Financial Literacy Newsletter. This edition is focused on helping Canadians manage their financial health in response to the COVID-19 pandemic. We hope you find the articles, tips, and suggested resources helpful. 

We start things off with an article on the importance of budgeting. During this challenging time, budgeting has never been more important. To get you started, the Agency suggests using its new budgeting tool, the Budget Planner, which it launched last November. The Budget Planner draws on behavioural research into how people make financial decisions, and uses personalized tips, suggestions and alerts to make budgeting easier. Give it a try!

We also have contributions from some of our partner organizations who are working hard to support Canadians in this time of crisis. These include an article from Public Services and Procurement Canada on direct deposit – a fast, secure and convenient way to receive benefits and tax refunds from the Government of Canada. On a related theme, FCAC’s Director of Research, Policy and Education, Ruth Stephen, recently published a blog post on what you need to know about cashing your government benefits cheque, such as the Canada Emergency Response Benefit (CERB).

There is also a timely contribution from the Canadian Anti-Fraud Centre. Fraudsters have been preying on consumers' fears and misinformation regarding COVID-19. To avoid becoming a victim of fraud, be sure to follow the Centre’s tips and advice! 

And, finally, if you have questions about the safety of the money you have in your bank, you’ll want to read the article from the Canada Deposit Insurance Corporation on the steps it has taken to modernize and strengthen deposit protection. 

Happy reading. Stay strong. Stay safe.

What’s new

COVID-19: Budgeting during emergency situations

By: Financial Consumer Agency of Canada (FCAC)

The COVID-19 pandemic is impacting the livelihood of households, communities, and businesses across Canada. Many Canadians are having a tough time making ends meet, even as we spend less. 

Financial hardships can put tremendous strain on you and your family. This is why, more than ever, having a budget is important. It is the foundation of financial well-being. 

Why you need a budget? 

A budget is a simple but highly effective way to assess how much money is coming in, going out and being saved. In these tough times, it will help guide your spending so you can make sure you have the money you need for life’s basic necessities – a roof over your head, clothing, food, or medication.  

Research backs this up. FCAC has found that when people start using a budget, they make better financial decisions and improve their financial well-being. They are better at keeping up with their financial commitments and reducing their spending when money is tight – which is the case for many Canadians during the pandemic.  

How to make a budget

Don’t know where to start? A good first step is to figure out where your money is going. Over the next few weeks, track what’s coming in and going out and adjust where needed. Then use this information to make a budget.

There is no right or wrong way to make a budget – so long as you keep track of every dollar you spend against your total income. You can use age-old methods, such as handwritten tracking, or you can use digital tools such as spreadsheets, mobile apps or financial software. 

If you’re looking for help, try FCAC’s Budget Planner. The Budget Planner draws on research into how people make financial decisions and uses personalized educational content. Its interactive features will help you better identify your priorities, where to cut expenses, and where you can save money. It will also enable you to compare your spending habits with other Canadians in similar life situations. 

Stick to your budget 

Once you have a budget, stick to it and adjust it as you go. To help you stay on track, make sure to keep all your receipts and bills so you can enter them into your budget. Also limit your spending as much as possible to what is in your budget. 

Having a budget can be a critical part of your response to the COVID-19 pandemic. It will help you live within your means and enable you to have better control over your finances. In the process, you’ll be able to address any money worries you may have and put yourself in a better position to get through an emergency situation.  

Learn more about making a budget and follow FCAC on Facebook and Twitter for daily money management tips.

Direct deposit is a safe choice for Canadians

By: Public Services and Procurement Canada

In response to the COVID-19 pandemic, the Government of Canada launched a series of emergency relief programs to support individuals and businesses facing hardship. With millions of additional payments now being issued by the federal government, the move towards increasing direct deposit enrolment has become a key factor in ensuring the rapid delivery of benefit payments to Canadians in need. Today, approximately 91% of all Government of Canada payments are issued to Canadians by direct deposit.

Convenient and reliable. Direct deposit is a convenient and reliable method to receive payments directly in your bank account because you can be sure that payments will always be deposited on time, using the bank account information that is supplied at the time of enrolment. With direct deposit, payments cannot be lost or stolen, and it eliminates unnecessary trips to the bank. At a time when maintaining physical distancing has become the new normal, getting your government payments electronically just makes sense. 

Trusted and secure. The Government of Canada considers privacy and security of utmost importance in the issuance of payments. Any information you provide to the Government of Canada when you enrol in direct deposit is protected under the Government of Canada Privacy Act. Access to your bank account is governed by your account agreement with your financial institution. Please consult your bank or credit union for more information regarding their privacy and security measures.

Easy and fast. To help facilitate direct deposit enrolment, Public Services and Procurement Canada, in collaboration with the Canada Revenue Agency and financial institutions, have worked together to offer easy online enrolment through Canadian financial institutions. Many banks and credit unions also provide alternative direct deposit enrolment solutions that are not web-based. You can now enrol for direct deposit with many financial institutions for payments, such as the COVID-19 emergency benefits, your tax refund and various benefit payments including the Canada child benefit, GST/HST credit and more. 

Other Government of Canada payments, including Employment Insurance (EI), Canada Pension Plan (CPP) and Old Age Security (OAS) benefits can also be received by direct deposit.

Learn about enrolment options for all your Government of Canada payments by visiting directdeposit.gc.ca

Frauds and scams during COVID-19

By: Canadian Anti-Fraud Centre

On March 11, the World Health Organization declared COVID-19 a pandemic. At the same time, police, regulators and governments around the world started to warn people of the increased spread of false and deceptive information, and that we need to be vigilant to protect ourselves from fraud and financial abuse.

The Canadian Anti-Fraud Centre is tracking and monitoring the threat that fraud poses to Canadians. Since March 6, it has documented nearly 10,000 Canadian fraud reports with nearly 10% of these directly tied to the COVID-19 pandemic. Given Canadians’ heightened sense of fear, anxiety and isolation, and the fact that more Canadians are at home using the internet, managing financial health needs to include recognizing, rejecting and reporting fraud. 

Recognizing fraud

Recognizing a scam can be difficult. We must slow down and not react to unsolicited offers, urgent requests, and really good deals that just may be too good to be true. These requests and offers, or even demands in some cases, come through your telephone, the internet, social networking sites, email and text messaging. They include calls or text messages claiming to be from a government agency, a bank or a credit company, a video-streaming service or an online retailer. They also include ads on internet classified sites or social networks and can even be email messages that seem to be from friends or acquaintances. 

We recommend doing a gut check. Take 5 minutes and ask yourself: Does it involve high-pressure tactics? Is it a really good deal? Has my provider ever contacted me this way before? 

Take time to learn more about the latest frauds and scams.

Rejecting fraud

Rejecting fraud begins with due diligence. It involves identifying the source of the suspected fraudulent request, demand or offer, and scrutinizing it. Check official government sites, talk to family members and friends, verify the true cost of items and check for reviews and information on the offer, seller or website. Often you may find that someone has flagged the scam or provided negative feedback. 

Once we recognize the source of the potential fraud, we can begin to reject them. Hang up, don’t respond, and don’t follow the urgent or coercive instructions. 

Reporting fraud

Whether you’re a victim or not, reporting fraud is important. To make it easier to report fraud, you should collect all the information related to the incident. Create a chronological statement of events. Collect your receipts, email exchanges, text messages, or copies of any relevant material. 

Reporting fraud is not just about contacting the police and the Canadian Anti-Fraud Centre. As appropriate, you should also notify your financial institutions, the credit bureaus, and other relevant government institutions. Also, be sure to talk to family members and friends to warn them. The more we talk about it, the more fraud awareness we spread.

If you or someone you know has been a victim of fraud, please report it to the Canadian Anti-Fraud Centre.

Changes to CDIC deposit protection: you could be covered for more than you realize

By: Canada Deposit Insurance Corporation (CDIC)

During times of uncertainty and economic instability, the importance of financial literacy is brought to light as people are forced to examine their spending and re-evaluate their budgets. Working with a reduced cash flow in an altered living environment, while trying to prioritize your health and well-being, can be a daunting task. You have a million things on your mind, but the safety of the money you rely on to push through these unprecedented times should not be a cause for concern. The Canada Deposit Insurance Corporation (CDIC) was established in 1967 to protect your money, and recent improvements to deposit protection now mean that even more of your hard-earned savings are covered.

If you’ve never heard of the CDIC, here is a brief introduction. CDIC is a federal Crown corporation that contributes to the stability of the Canadian financial system by providing free and automatic protection of your eligible deposits up to $100,000 (including principal and interest) in each of our seven coverage categories. When managing your finances, knowing which of your deposits are protected will give you added peace of mind and confidence that your money is safe if your financial institution should fail. 

On April 30, 2020, changes to modernize and strengthen deposit protection came into effect. These changes mark the first major update to the CDIC framework since 1995. The changes to deposit insurance include: 

Expanded coverage of eligible deposits held in foreign currencies: This expanded coverage means that deposits in foreign currency, in any of our seven coverage categories, are eligible for protection. 

Extended coverage of eligible deposits with terms greater than 5 years: Removing the five-year term limits means that GICs with terms of more than five years are now protected. 

The elimination of coverage for travellers’ cheques (which are no longer issued by CDIC member institutions): If you do still happen to have travellers’ cheques tucked away in a drawer, contact your financial institution to determine whether these cheques are still being honoured. 

Managing financial health in these challenging times can be intimidating. Give yourself some peace of mind, take a few minutes to use our deposit insurance calculator and find out how your money is protected at any CDIC member institution

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