Rising interest rates. Inflation. An on-going energy crisis related to the war in Ukraine. It all adds up to a cost-of-living challenge that only the mega-wealthy have the resources to ignore.
You’re not alone in wondering just what 2023 holds in store for you and your family. Pretty much everyone has been financially affected by what has happened this year, and most leading economic indicators suggest that there’s more to come.
How Do We Know?
In October of this year, the research company Ipsos partnered with a financial institution to undertake an analysis of the financial mood of several thousand Canadians as part of their Fall 2022 Debt Survey. The results make interesting reading.
How Canadians Are Feeling – & How They Can Prepare
So, as part of our on-going commitment to provide our Everything Retirement followers with sound financial and economic insight about what’s going on in Canada (sources we’ve judged as diligently researched and credible), we’re happy to reproduce a few of the key financial findings and consumer concerns – which we suspect mirror your own.
- Most (87%) believe we will soon enter a recession or are already in one. The majority (56%) think it will last at least a year.
- Six in ten Canadians (59%) claim that increased spending is now outpacing their income growth.
- 48% of Canadians feel overwhelmed by their financial situation.
- 1 in 4 mortgage holders say that if rates rise much further, they will be forced to sell their homes when their mortgage renews.
While we always avoid the temptation to be alarmist about negative economic news – because that can cloud judgement and precipitate hasty and ill-considered reactions – it’s important to consider these findings on their merits and calmly consider what can be done to address them.
Discuss Your Concerns With Your Financial Advisor
As your credit union financial advisor* will be the first to say, they have the tools and knowledge necessary to minimise the damage of financially challenging times and put your mind at ease.
Put another way: get professional help if you feel you need it. Schedule a meeting with your advisor and, after due discussion, work out a plan. Now is not the time to improvise or, worse still, ignore the financial challenges so many of us face. Consider taking the following steps:
1. Analyse
Take an accurate snapshot of your personal and family financial situation. Track how much you’re spending each month. That should go way beyond fixed costs such as mortgage payments, rent and car expenses, but should include discretionary costs such as food, entertainment and clothing.
2. Assess
According to the Manulife findings, more than 50% of Canadians surveyed say they’re spending less on leisure and entertainment. The same proportion of respondents are already grocery shopping on a budget. Don’t be afraid to dig deeper for more ways to help save.
What costs can you trim, or eliminate altogether? Your credit union financial advisor can help you with this task and don’t be too shy to ask. Remember, pride goes before a fall.
3. Cut Back
It’s one thing to have a plan, quite another to put that plan into action. The current U.K. economy is a case-in-point. We’ve all heard and read about it. The measures being taken to put the U.K. economy back in balance are both draconian and necessary. Both major and minor expenditures are being reviewed and subjected to intense scrutiny, with a view to maintaining national income while reducing national liabilities. It’s the kind of approach that will work and represents a lesson in learning for us all. What the U.K. is doing is establishing a distinction between need-to-have and nice-to have. It’s a lead worth considering.
4. Track
Assuming you’ve put a financial game plan for 2023 into place, make a promise to yourself to stick with it. Again, your credit union financial advisor can help you. It’s what they do for a living! As part of their consultation process, they will likely recommend a few products, services and even software innovations to help you monitor your progress each month. Take your credit union financial professional into your confidence and work in partnership so you can ride out the choppy waters we find ourselves in now.
And Finally, Clarity is Key
Knowing where you’re going and deploying the tools to help you get there is axiomatic. Drift is your enemy because it leads to uncertainty and misapprehension. Remember the words of Franklin D. Roosevelt: “We have nothing to fear but fear itself.”
*Don’t yet have a credit union advisor? Everything Retirement’s Credit Union partners (Coastal Community Credit Union, Coastal Community Private Wealth Group or Interior Savings) are always available to help their clients with timely advice to help ease their minds and provide a financial strategy. Think about contacting them if you haven’t already.
