4 tips for adjusting your budget during a crisis


Whenever your income and expenses change drastically, you might need to take another look at your finances. That could mean setting new priorities or holding off on something fun, which isn’t always easy.

Before you do anything else, it’s a good idea to get a clear picture of your current income and expenses. That means drawing up a budget if you don’t already have one. Here are some tips for making—or changing—your budget when the unexpected happens.

1. Calculate your income

When something unexpected happens, your income might drop or even disappear entirely, if you lose your job. The first thing you need to do is make sure you’re spending less than you earn.

Don’t forget to include every source of income in your budget, including any federal or provincial assistance that you’re receiving.

2. Limit your spending

Before you go into debt, update your expenses to reflect your new circumstances. While you might be saving money in some areas (commute, childcare, work clothes, entertainment and eating out, travel, etc.), other expenses might take their place. We recommend identifying which expenses are priorities, then planning for any costs that might go up.

3. Use your savings

If you have to dip into your savings, here’s how to use them wisely:

  • Tap into your emergency fund if you have one. This counts as an emergency.
  • Transfer money you’ve set aside for bigger purchases from your savings to your chequing account.
  • Take money out of your savings account before you cash out any investments, which are probably worth less than they were a few weeks ago. You don’t want to miss out when the stock market turns around. Your investments will probably grow over the long term, so patience is often your best bet.
  • Only make withdrawals from your registered savings if you’ve exhausted all your other options. If you must, cash out investments that didn’t take a big hit in the last few weeks. Take money out of your TFSA first if possible, since those withdrawals are tax-free. Withdrawing money from your RRSP or other investment accounts could affect your long-term goals, so it’s better to try cutting your expenses first.

4. Keep your budget up to date

Coming up with a budget is great, but sticking with it is even more important, especially during a crisis. The more accurate your budget is, the more useful it will be. One easy way to make sure you’re on top of things is to put reminders in your calendar. Choose a time that works for you: Sunday morning while you drink your coffee, Monday morning before you start your work week, or right after payday.