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How students can apply for the CESB and manage their finances during COVID-19

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Photo by Brooke Cagle/Unsplash

By Mikael Castaldo, RateHub.ca

Special to the Financial Independence Hub

Pursuing a post-secondary degree marks a significant chapter in one’s life: and it’s being dramatically rewritten for millions of students across Canada in the wake of COVID-19. Campuses on lockdown, classes gone digital, and increasingly gloomy job prospects are just some of the new realities students face.

But while these times pose new challenges, there’s some silver lining as many schools have made moves to ease grading criteria and the federal government has stepped in a big way to launch new financial aid programs. If you’re a post-secondary student who’s looking to better manage your money during COVID-19 but aren’t sure where to start, you’ve come to the right place.

Below is a list of what I consider to be the key first steps students should take to get a better grip on their finances during COVID-19:

1.)  Apply for CESB

Whether you’re a freshman whose paid summer internship was abruptly cancelled or a recent grad struggling to land a position due to the very real impact COVID-19 has had on the job market, you can seek financial support from the federal government by applying for CESB.

CESB – which is short for Canada Emergency Student Benefit – is a form of unemployment insurance and is the single-most impactful form of financial support you can receive as a student during COVID-19.

Here are some things you need to know:

How much support can you get?

If you qualify for CESB, you can receive one of the following amounts for a set four-week period:

  • $1,250 either because you’re: 1. unable to work due to COVID-19, 2. actively on the job hunt but can’t successfully land a position, or 3. currently employed but only earn a monthly income of under $1,000 before taxes
  • Up to $2,000 if you tick off any of the three boxes above and you also have a disability or you’re a parent with a child under the age of 12.

Who does (and doesn’t) qualify for CESB?

While CESB is mostly geared towards students currently enrolled in a post-secondary institution, you can also receive support even if you’re not technically in college or university right now. For instance, you can receive CESB if you’re a recent post-secondary grad and completed your education in December 2019 or later. Additionally, if you’re in high school and applied for a post-secondary program set to start by February 2021, you also may qualify.

You must also be a Canadian citizen, permanent resident, registered Indian, or in very rare cases, recognized as a person in need of protection by the Refugee Board of Canada.

Unfortunately, that rules out international students.

The type of program and institution you’re enrolled in matters too. You’ll need to be in (or applying to join) a program that’s at least 12 weeks long, working towards a certificate or degree, and a student in one of the post-secondary institutions recognized by the government (the good news here is the list of designated schools is long and widely encompassing).

Aside from just being an eligible student and ticking all of the boxes above, you must also be actively looking for a job and unable to find employment due to COVID-19. You’re not eligible to get any CESB payments if you aren’t actively looking for work, have a job that earns over $1,000 per month before taxes, or already receiving support from the Canada Emergency Relief Benefit.

How to apply

CESB is available for up to a maximum of 16 weeks; however, you’re not guaranteed to get payments for that entire length of time and must apply for CESB every 4 weeks. The idea being you can keep reapplying and receiving support until you no longer need it.

The 4-week application periods aren’t arbitrary and follow a strict schedule based on the following dates:

  • May 10 to June 6, 2020 (no longer available)
  • June 7 to July 4, 2020
  • July 5 to August 1, 2020
  • August 2 to August 29, 2020

As long as your SIN is registered on the CRA website and you’ve filed your 2018 tax return, you should be able to apply online straight from CRA’s My Account. If you don’t, you can call 1-800-959-2019 or 1-800-959-2041. Phone lines are open seven days a week between 6 am to 3 am. You’ll also want to set up direct deposit on your CRA My Account so your CESB payments can be sent straight to your bank account digitally.

Remember, CESB isn’t intended as a free subsidy for all students but is temporary financial support for those who are actively looking for a job and can’t get one. The Government of Canada may even require you to submit proof you’ve been searching for a job, so be sure to keep records of your emails and other communications with potential employers.

2.) Set a budget and cut discretionary spending

A well-maintained budget can help you save hundreds of dollars every month – and in an unprecedented time like this – every dollar counts.

The first step of creating a budget is to start tracking how much you spend in the first place.

List out every purchase you make by amount and by type. And yes, I’m talking about every purchase. Spent $10 on

Lunch? Track it. Bought $50 worth of groceries? Track it. Use your smartphone or scribble down in a small notebook, it’s up to you, just track it.

While you can use apps to automate the process, I recommend noting down every purchase manually since it’s the best way to put your spending habits under the microscope, spot your biggest money wasters, and discover how even small nondescript purchases can add up. Nothing can get you more motivated to start meal prepping at home than seeing exactly how much you spend on takeout.

Once you have a grasp of your spending habits, start separating needs from wants and cutting out any discretionary purchases. Next, set strict spending caps for every category (i.e. no more than $100 on groceries per week) to ensure your monthly income can cover those essentials.

If you’ve got any money left over at the end of the month, don’t splurge and instead set aside the money in a high-interest savings account to gradually build up some cash reserves.

3.) Check if you can receive relief from your biggest bills

If you own a car, reach out to your insurance provider. In the wake of COVID-19, many are offering either rebates, discounts, or deferrals that can help cut down your monthly insurance payments. The same goes for utility bills. For instance, both Toronto Hydro and BC Hydro are offering support to customers who may be under financial pressure with options like payment deferrals or flexible payment plans with no penalties.

Banks are also stepping up in their own way. If you currently owe credit card debt, reach out to your bank and ask to receive payment deferrals and a temporary drop in your card’s interest rates. That can help postpone your minimum payments and ensure more of your money can go towards covering your more immediate essential expenses. Ratehub has provided a breakdown of how credit card minimum payment deferrals work and how terms differ by bank. Continue Reading…

Financing Small Business during the Covid-19 pandemic

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The worldwide pandemic has wreaked havoc on a large number of small businesses, leaving many looking for solutions to ease financial strain.

We asked 11 experts to share their financing tips to help small businesses during the Covid-19 Recession.

Here’s what they had to say:

Don’t cut Marketing 

During recessions, the first thing most companies do is cut their marketing budgets. How are you going to stay at the forefront of your customers’ minds with so much going on? Instead of cutting your marketing budget altogether, be more strategic and mindful about what you are spending your money on. Consider marketing efforts you wouldn’t normally try in robust times. Don’t let customers forget about you. John Yardley, Threads

Get creative

Small businesses that sell goods should explore options related to cutting inventory costs without giving up the quality of your products or hurting your customer experience. Some ideas of this would be reducing inventory to accommodate the current and projected demand during this time, negotiating better prices with suppliers or shipping items straight to consumers rather than to a warehouse. Being creative and resourceful when cutting costs will get small businesses through these hard times.  Peter Babichenko, Sahara Case

Cut nonessential costs

Financing tips during a pandemic aren’t easy, but I think it’s important to find what makes your business special and do everything you can to keep that going. The rest you can build back later. For now, focusing on cutting costs and staying afloat should be priority number one. A good number of the largest companies on the planet are going to remote work (Twitter, Facebook). If you’re a small business cutting costs can be tough, but office expenses are a great place to start. William Daniel, Financial Services SEO Company

Diversify your offers

One great way to survive during the COVID-19 recession is to diversify your offerings. Many of my clients have already started working in this direction. Most of them who mainly had a physical product are now developing a digital version of it. We are already seeing so many academic institutes turning their class-based lectures into downloadable online courses. Likewise, many eateries are transforming their traditional phone ordering systems into online food delivery apps. Small businesses need to pivot and think about going digital to weather this crisis. Joe Wilson, MintResume

Monitor your Credit Score

Small business owners should pay close attention to their personal credit score to give themselves the best chance at obtaining reasonable financing in the future. Most banks use personal credit for small business owners when assessing risk. This is especially true for small businesses that haven’t been around long or are too small to establish a business credit score. One tip is to look at your credit utilization, which is the amount of credit available versus the amount being used. A good rule of thumb is to use less than 30% of the total credit you have available. Getting below this number can help quickly improve your credit score. R.J. Weiss, The Ways to Wealth

Consider consolidating

Maybe it’s time to consolidate operations or offer similar non-competing business space in your office to share? Talking to someone facing the same concerns has many other benefits for the mind and soul – not to mention the ideas that may come from collaboration. Alex Pesic, Invoice Quick

Offer discounts to rid stock before tossing

Small businesses are dying, and that’s even without the pandemic coming into effect. However, due to what has happened around the world, more of us are conscious to shop local and use small businesses in order to support the local economy. Continue Reading…

Looking in the rear-view mirror to avoid hitting something that lies ahead

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By Noah Solomon

Special to the Financial Independence Hub

The vast majority of today’s portfolios represent a Pavlovian response to the obliging nature of markets over the past several decades. The unprecedented increase in the value of risk assets coupled with low volatility have lulled investors into a false sense of security accompanied by an “if it ain’t broke, don’t fix it” approach to portfolio construction and risk management.

Most portfolios are dependent on the next few decades mimicking the last few. Specifically, they are over-allocated towards assets that have performed well during the secular (yet unusual) goldilocks environment of the past 40 years. As is typical of human behaviour, investors are looking in a 40-year rear-view mirror to avoid hitting something that may be in front of them.

What is Normal?

The past four decades have been unusually kind to investors. Strong tailwinds of favourable demographics, low inflation, falling rates and globalization have fueled an unprecedented rise in stocks, bonds, real estate, and almost every other major asset class. While it would be nice if these conditions were the norm, the fact is that they are unique from a long-term historical perspective.

An astounding 91% of the total price appreciation of a classic 60/40 equity/bond portfolio over the past 90 years is attributable to 22 years between 1984 and 2007. This period was also an atypically strong period for real estate, representing 72% of total appreciation over the past 90 years.

Notwithstanding some painful bumps along the way, including the tech wreck of 2000-2002 and the global financial crisis of 2008, the investing experience of most people today has been a proverbial walk in the park. An entire generation of investors has never experienced anything like the 86% peak-trough decline in equities of the 1930s which resulted in two decades of lost performance. Nor has it faced anything remotely like the 25% decline in U.S. Treasury Bonds during the stagflation-plagued 1970s.

What If?

Nobody (including us) can know for sure what the future holds. However, there are strong reasons to suspect that the road ahead will be drastically different than the unusually smooth path we have been on for the past several decades. Historically high asset valuations, record corporate and sovereign debt levels, $17 trillion in negative yielding debt, the lowest capital gains taxes in U.S. history, historically high income disparity across the developed world, and a global rise in populism and protectionism all suggest that, as Dorothy stated in The Wizard of Oz, “We’re not in Kansas anymore.” Continue Reading…

Knowing your status is key to breaking up with the IRS through expatriation

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By Elena Hanson

Special to the Financial Independence Hub

Giving up U.S. citizenship isn’t an easy decision to make, especially since there are benefits to having it. For example, if you are career-minded and interested in the larger, more diversified U.S. economy, or you want to find employment with a Canadian affiliate of an American company, holding the status of U.S. citizenship can be an advantage.

But when it comes to taxation, there are plenty of reasons to consider cutting ties with the Internal Revenue Service (IRS).

For starters, being a U.S. citizen can be, well, taxing. The tax obligations and restrictions of U.S. citizens, even those who are non-resident, can be onerous, to say the least, and include such things as:

  • Filing U.S. tax returns and paying U.S. income taxes.
  • Paying gift tax on gifts to any recipients, including a spouse if he/she is not an American, if the gift exceeds a certain threshold.
  • Restrictions on types of financial assets in order to avoid additional reporting or double taxation.
  • Restrictions on how to run a non-U.S. based business or on how to be part of non-U.S. family wealth.
  • Additional complexities with non-U.S. inheritance.
  • Full disclosure of a financial accounts and assets, even those received through employment, if the American has a signature authority.

These obligations apply to any U.S. citizen, no matter where they reside or where their assets are held. This includes those who are considered ‘Accidental Americans’ – people who discover for the first time that they are considered U.S. citizens.

Yes, that might be the case even if you’ve spent your entire life as a citizen and resident of Canada, so it is important to explore how to become tax compliant south of the border. Feigning ignorance will not likely save you from the long arm of the IRS, and the only thing costlier than paying and/or reporting U.S. taxes is not doing so. In fact, the fines and penalties associated with willfully ignoring obligations can be financially devastating.

So, knowing your status is the first step in changing your status.

The only way to relieve yourself of these obligations is to renounce U.S. citizenship. The legal process involves an appointment with the U.S. consulate, remitting a USD $2,345 administrative fee to receive a Certificate of Loss of Nationality, and the physical surrender of your U.S. passport.

From a tax perspective, renouncing may also require paying U.S. taxes and filing additional forms disclosing all financial aspects of your life, but it is probably the lesser of two evils over the long term; by retaining U.S. citizenship you must file lengthy tax returns with potentially hefty penalties, and possibly pay taxes annually).

Obviously, this process is more straightforward for those who are aware of their U.S. citizenship and already have a social security number. For those to whom U.S. citizenship has come as a surprise, you may have to acquire a social security number in order to file your first … and maybe shortly after that, your last U.S. tax return. Continue Reading…

Supporting the Finances of Seniors in the age of COVID-19

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By Rick Lowes 

Special to the Financial Independence Hub 

COVID-19 continues to have a tremendous impact on every aspect of our lives, from the way we work and connect with friends and family to how we shop and bank. Yet as we look at the world around us changing, the need for social distancing measures and self-isolation has accelerated the pace of digital adoption, especially among a population that is considered highly vulnerable to this pandemic.

While ensuring there continues to be support for seniors available through in-branch visits, we want to keep our seniors safe and that means more focused efforts by phone, and stepping up support to  help seniors bank online.

RBC recently initiated customized proactive outreach to seniors, reinforcing the message “be safe, stay home” – and we’ve seen a very positive response from seniors. In the span of just a month, we saw an 84% increase in digital enrollment among clients aged 60+ and a 210% rise in digital activity from seniors who were enrolled, but had not actively used online banking for at least six months. The most actively used online and mobile banking options per week: sending electronic money transfers and making payments.

We understand online or mobile banking can feel intimidating for Canadians of all ages who are first time users. This made it crucial to ensure we could make online and mobile banking as simple and convenient as possible. We set up our “bank easy” hub, with how-to videos and very clear instruction guides, to show how easily – and securely – anyone can bank digitally, using online and mobile banking to do their everyday transactions.

Front-of-the-line access for those over 70

With a significant rise in calls to our contact centre, we are also prioritizing calls from clients over the age of 70: and ensuring seniors get this same “front of the line” access for branch visits. Continue Reading…