After The Fall: Canadian Women, Money And COVID-19

The pandemic’s economic effects have been particularly hard on women. Three Canadians share their money worries and get advice from experts.

In the first chaotic weeks of the worldwide COVID-19 lockdown, Danielle French went for a walk in the woods near her home in the Peterborough, Ont., area. The owner of the event venue South Pond Farms, French needed time to think. With workshops, private dinners and weddings on indefinite hold, how would she keep her company afloat?

As she hiked, she spotted three different types of trees knitted together in a clump. “I know this is going to sound like the corniest thing ever, but that’s how I see myself and this business,” says French. “Something can be lopped off, but we’ve always got a couple of other opportunities.”

French is hardly the only person who has been forced to turn to her inner reserves of optimism to face a world spun off its financial axis. According to initial Statistics Canada estimates, economic activity in the country plunged nine percent in March 2020—the largest drop on record. Nearly half of all Canadian households reported losing income or experiencing layoffs in recent months. In April, nearly nine in 10 Canadians told StatCan that they expected the worst was yet to come.

While this reality is unprecedented, financial setbacks of all stripes are hardly new. Illness, job loss and divorce can all cause severe income shocks, and facing one isn’t a matter of if, but when. A 2017 study by the National Endowment for Financial Education in the U.S. showed that by age 70, 96 percent of people have experienced four or more major life events that caused their income to drop at least 10 percent.

A statistic that reads: 69% of Canadian women are worried about job loss as a result of COVID-19.

(Source: Ipsos, April 2020.)

Money stumbles can be particularly hard on women. In April 2020, the Financial Consumer Agency of Canada released results from a survey on financial well-being, including the ability to absorb setbacks. While the gender split among respondents who fit the definition of “financially secure” was relatively even, 66 percent of the “struggling a lot” group were women.

What’s more, this current recession is unlike others in the past, in that female-dominated service sector jobs are expected to have a slower comeback than male-dominated construction and manufacturing. And, according to Statistics Canada, women are losing more work hours to deal with family and personal matters than men are.

Fortunately, many women are emotionally well equipped to weather occasional storms, says Barbara Stewart, a chartered financial analyst in Toronto.

“My research has shown that resilience is a key personality trait in women, which really bodes well for getting out of these awful situations,” she says. “We’re used to making things work.”

To learn how to pick up the pieces, Chatelaine asked Stewart and Judith Cane, a veteran money coach in Sackville, N.B., to weigh in with advice for three women, including French, who are currently facing financial setbacks.

Just treading water: Wendy, 58, Cambridge, Ont.

A graphic listing Wendy's debt, income and assets. Wendy’s past few years read like the lyrics to a country song, with a trifecta of setbacks: serious illness, job loss after a 32-year career as a university administrator and divorce. But that’s only the half of it.

In 2019, Wendy (who asked to use only her first name) lost her mother after a long illness. Then her sister experienced a catastrophic health emergency that resulted in a leg amputation; she moved into Wendy’s bungalow until she was strong enough to return home. Meanwhile, a divorce settlement halved Wendy’s once-healthy pension. Her house needed work, but after being forced into retirement 10 years earlier than she expected, she wasn’t sure how to pay for the renovations.

“I should have been actively looking for work, but I just couldn’t. Taking care of my mom and then my sister, I had no energy,” Wendy says.

She eventually gutted her basement herself and had a new apartment built to rent out through Airbnb. The money was meant to tide her over until she landed another university admin job. But those positions are few and far between, especially now in the wake of severe financial cutbacks in education. When the COVID-19 pandemic hit, Wendy became desperate and tried casting her employment net wider.

“I applied for anything and everything,” she says. “I got turned down by Home Depot.”

The loss of her Airbnb income made Wendy eligible for the Canada Emergency Response Benefit (CERB), but she’s uncertain about what to do after the money runs out. Should she sell her house and live off the equity until she bounces back? Dip into her RRSP money, even though she lost more than $30,000 when the markets tanked in March?

Despite the unknowns, Wendy is optimistic she will recover somewhat. “I’m okay with change. I’m quite adaptable and forward-thinking. That’s one of my strengths,” she says, rhyming off a few young start-up companies she’d love to work for. “But I don’t know. I’m just trying to tread water at the moment.”

A statistics that reads: 43% of women have no retirement savings.

(Source: BDO Canada, September 2019)

The experts say
“It’s great that she’s an optimist,” says Stewart. “But practically speaking, she needs a job ASAP.”

Or, make that many jobs. Wendy had already started down that path with her Airbnb rental, but she needs to diversify her sources of income even further. Rather than focusing on full-time employment, Stewart suggests building a “portfolio career,” or combining a mix of part-time jobs with self-employment gigs. Wendy could perhaps get bookkeeping training through a government retraining program or work in retail for half the year, as well as renting out her apartment to a long-term tenant.

Cane agrees that renting out the vacant space is a must if Wendy wants to keep the house—which she does, as her mortgage costs are less than rent on a one-bedroom apartment in her area. Cane also says that it’s too bad Wendy lost half her pension in the divorce. After a long marriage, often a couple’s biggest asset isn’t the house, but the pension.

If Wendy really needs a bit of cash in the coming months, one option is to take up to $5,000 out of her RRSP. Usually, that would come with a 10 percent withholding tax, but by late May, the federal government was being pushed to eliminate fees for some early RRSP withdrawals, since many Canadians might need to tap into their long-term savings for short-term emergencies.

When big dreams go bad: Cherolyn Knapp, 49, Victoria, B.C.

A photo of Cherolyn Knapp.

(Photo: courtesy Cherolyn Knapp)

A list of Cherolyn Knapp's debt, assets and income. When Cherolyn Knapp and her husband drove across the country at the end of July 2019, they thought their dream of moving from Ontario to the beaches and mountains of Victoria was finally coming true. But within months, that dream unravelled.

Her husband’s new job didn’t work out. Cherolyn had planned to transition from law to civil mediation, but discovered that finding clients in her new field took longer than expected. And then their beloved dog, a sweet and goofy Great Dane, developed congestive heart failure and died. It was unexpected, since he was only three years old.

“To have the job not work out and to lose the dog all at the same time, it was a blow. That was really hard,” she says.

The move cost them $17,000, plus realtor fees. Their new mortgage was slightly more expensive and living on picturesque Vancouver Island doesn’t come cheap: Locals joke that B.C. stands for “bring cash.” Suddenly, the couple found themselves slashing their spending, while her husband applied for Employment Insurance.

“Here we were in this brand-new place and we wanted to go out for dinner—Victoria has a wonderful restaurant scene—and we couldn’t do it,” says Cherolyn.
Then their luck changed. In February 2020, her husband landed a job at a university and clients started trickling in for Cherolyn. The couple bought a Great Dane puppy with feet the size of saucers: Cherolyn is still proud that the $3,000 they paid for Stanley was the only time they raided their TFSA throughout the whole ordeal.

But now what? Although their income has stabilized, Cherolyn isn’t sure how to start saving for retirement again after a year and a half of focusing on immediate cash flow.

(Source: Statistics Canada)

The experts say
“I love the fact that they didn’t raid their TFSAs and their RRSP accounts. That’s fantastic,” says Cane. Even so, it’s time to hire a fee-only financial planner—someone who charges for advice rather than earning commissions on sales and transactions—to draft a new budget that covers financial goals for the next 12 months, five years and retirement, she advises. “It’s the perfect time to do it because they’re kind of just starting over in their lives.”

Even though her husband’s initial job didn’t work out, he and Cherolyn can claim their moving expenses, such as travel, storage and transportation costs, on their income taxes. Any tax refund can be shuttled into registered retirement savings and get them back into the habit of saving. They might not want to worry so much about paying off the house quickly, says Stewart. Borrowing money is still cheap: She herself just locked into a seven-year fixed mortgage at 3.4 percent.

To ensure that Cherolyn and her husband don’t start spending too much too quickly as pandemic restrictions lift, Cane recommends opening a few savings accounts and earmarking earnings for things like future travel, home improvements or new furniture. Or, they could try living off one income for a month and see how that goes.

“But do it without sacrificing lifestyle,” Cane cautions. “I mean, you don’t move all the way to Victoria just so you can stay in and eat Kraft Dinner.”

Cold feet: Danielle French, 59, Pontypool, Ont.

A photo of Danielle French.

(Photo: Ash Naylor)

On March 15, 2020, a throng of happy couples descended on bucolic South Pond Farms, eager to sample potential wedding menus. But in between plates of crostini, owner Danielle French had tucked gloves and hand sanitizer.

The tasting day was held in that narrow slice of time between disbelief and panic. Few seemed worried that their June weddings might actually be postponed. Danielle, though, already had a bad feeling.

“When they left, we all looked at each other and we thought, ‘That’s it. We’re done. We’re going to have to shut down,’ ” she says.

Soon Danielle laid off her handful of staff, save for one chef. She paid him to create simmer-and-serve meal kits for delivery, which brought in a few thousand dollars early on. She’s since begun selling produce grown on the farm, too. With her line of credit nearly at maximum already, Danielle applied for federal small business loans to stay afloat. She estimates she has only a couple months of reserves.

Fortunately, her weddings have all been rescheduled for later in the year, and she has deposits in hand, so she isn’t out money—yet. But with large group gatherings banned for the foreseeable future, coming up with new ways to maintain cash flow is crucial.

And so, she’s been dreaming up new offerings, like prepared picnic baskets, and an elope- ment package in her renovated silo with an officiant at least six feet away. “As in, you can get married and then come back and throw a party,” she says.

The experts say
Creative thinking is definitely the way to go, agrees Cane. This is the time for small businesses to be more proactive, which means preparing now for the reopening of the province. South Pond Farms’ website ran a typical COVID-19 response message on its home page for months, and Cane says it’s time for new messaging, which should focus on how the company will make sure that future gatherings are safe, through increased cleaning and doing away with buffets.

Fortunately, weddings are already held outdoors, where seating can be set up for physical distancing. It also makes sense for Danielle to make use of government emergency loans, as well as the Canada Emergency Wage Subsidy (CEWS), which can be used to to pay up to 75 percent of employees’ wages until August 29, 2020. But Danielle needs to have a plan to pay any loans back. It’s not free money.

“It’s about taking advantage of government loans and balancing how much debt she really wants to take on,” says Stewart, who believes that the event industry will bounce back eventually.

She also suggests Danielle get creative with her booking and deposit policies—for instance, by offering clients reduced fees later if they lock in a non-cancellable deposit now. Or, she could make her cancellation policy more flexible, so couples are less reluctant to plan for the future during these uncertain times.

Get Chatelaine in your inbox!

Our very best stories, recipes, style and shopping tips, horoscopes and special offers. Delivered a couple of times a week.