2021 Federal Budget confirms why you need to budget

The federal budget was released on Monday, April 19th and it projects a $354.2 billon deficit for 2020-2021, and a $154.7 billion deficit in 2021-2022.

The numbers are so large that it makes your head spin. To put these numbers into context, a billion is a thousand million dollars.

A deficit, for those that are curious, means that you are spending more money than you are bringing in. The way you create a deficit is by going into debt.

The government’s plan with running this deficit is to spur economic growth. They are planning this.

A plan to spend money is called a budget. This the first Federal budget that Canada has had in the past two years.

As consumers we don’t really like to have budgets. In fact, only 49 per cent of Canadians actually have a budget.

Those that don’t have a budget report that they don’t due to lack of time, find budgeting boring, or that they just feel too overwhelmed about managing their money to create a budget.

This feeling of being overwhelmed when it comes to money management is understandable, especially during the pandemic. In fact, when delivering the budget our Finance Minister, Chystia Freeland, framed this sentiment perfectly, “We are all tired, frustrated, and afraid.”

Notwithstanding these feelings, she understands that a plan for the future must be set out, and that is exactly what the budget is for. We are spending into a deficit in an effort to create economic growth. “How do you pay for the deficit?”, Minister Freeland queried herself rhetorically, “Jobs and growth,” she responded.

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What can you learn from Federal Budget 2021?

When it comes to individual Canadians’ debt it isn’t as simple as getting another job or giving yourself a raise in income (like the government can in taxes). It comes down to really reviewing your income and expenses, setting a budget that works, and utilizing the insolvency laws in Canada to restructure your debts through a Consumer Proposal.

Making a budget is not an easy task. Do you think Finance Minister Freeland wrote the budget all by herself? Not a chance. She was surrounded and assisted by professionals that were there to help her make sense of it all, and to help get the Canadian Economy back on sound financial footing.

You too can have the help of professionals in creating your budget and getting your household finances back on sound footing, just like Minister Freeland. The professionals at Bromwich+Smith are a phone call or email away.

There is a reason why we have insolvency laws, because the most important resource in Canada is you, the citizen. The Government knows this. Your creditors know this. We at Bromwich+Smith know it too. Let us help you understand how we can help you recover financially and rebuild. Our Debt Relief Specialists are available by phone at 1.855.884.9243, or you can request a call back via our contact us page. There is no need to travel to a local office. Licensed Insolvency Trustee, Bromwich+Smith, is now offering video appointments, with all services available from the comfort of your home.

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By Shawn Stack, CIRP, LIT
Shawn is a Licensed Insolvency Trustee and was the co-founder and VP of the Insolvency Practice at Bromwich + Smith. While he is now retired, Shawn was a widely sought out mentor and trainer for new trustees, and a respected thinker, writer, and speaker on all things related to insolvency and budget matters. His opinions and advice remain at the forefront of thinking on Canadian insolvency practice.