Avoiding a Fall Financial Storm!.

A July 7 report from Statistics Canada on the financial state of Canadians says that, “Middle-income earners were affected most by inflationary pressures over the last year, as they spent an average of $1,306 more than they earned in income in the first quarter of 2023, while they had positive net saving of $521 in the first quarter of 2022.”

2022 was financially difficult for many of us… but the data indicates that a financial disaster may be on the way!

If you need some food for thought about how to handle a potential coming financial storm….. here are three things keep in mind.

Reconsider your big three:

The “big 3” expenses for Canadians are housing, transportation, and food. Adjusting your lifestyle can save you huge money in these areas. For example, having a roommate isn’t for everyone and you may have grown to like your independence, but it could instantly cut your expenses in half. If you are a homeowner, the demand for rental housing is surging and you may be able to rent a room to a student or even do some short-term Airbnb rentals to help with the mortgage.

Cars are another money pit for Canadians with the average price of a new ride now at $66,000 and financing rates hovering around 7%. The average car payment has gone from $577 in June of 2019 to $797 in June of 2023. Add that to the average Canadian gas prices of $1.68/litre and much higher prices for everything car-related from snow tires to an oil change. It’s easy to see how driving is taking a much bigger bite out of your paycheque these days. Going without a car might not be an option, but the inconvenience caused by going from a two-car family to a one-car family or to a cheaper/smaller/more fuel-efficient car might be looking a lot more tolerable given the savings.

Groceries are expected to run about $16,000 annually in 2023 for a family of four, so food is definitely an area that deserves attention. The news is full of tips and tricks for cutting back, so just start using a few that work for you. It could be searching the flyers and loading up on specials, clipping coupons, buying no-name, sticking to the shopping list, or a combination of these. There is almost always a cheaper food option and you have to balance your menu with your budget… do you buy Starbucks beans or a jumbo can of Folgers ground?

Stay calm and learn to dismiss the hype:

Constantly being worried about “what could happen” only leads to unnecessary anxiety. We are constantly bombarded by cable TV news, you-tubers, internet experts, naysayers, pundits, social media influencers & fin-fluencers… and it can really pile on the stress. It can also lead to a lot of illogical decisions. Nobody can predict the future and we sometimes forget that fact when we are bombarded by hyped-up news reports day after day. Financial market “experts” are a great example. There is always a steady stream of them predicting a huge stock crash and occasionally, they do get it right. However, the truth is that most of these predictions are flat-out wrong, and you would be much better off to ignore them and simply ride out any market downturns.

Focus on what you can control:

No matter how much you read or talk about inflation, recession, financial markets, or interest rates, all of these issues are way out of your control. There is no point trying to second-guess what the Bank of Canada may do to interest rates, or which way stock markets will move. If you are going to stress over your finances, focus on the things you can control — like reducing your spending, increasing your income, or learning to better manage and invest your money.

Financial storms come and go and this won’t be the last. Keep you core expenses in check and your mindset calm and you will get through it!