Inflation & Your Financial Strategy

In a December 2021 poll, 87% of Canadians surveyed reported that the rising price of everyday goods was their top source of anxiety1. The last period that caused this level of financial concern for Canadians was the 1990s2, when inflation reached a high of 5.5%. Today, it sits at about 4.8%, primarily due to transportation and supply chain issues and a sharp rise in energy prices. The associated increase in cost is passed along to Canadian consumers, who are concerned about how to pay for it.

This is a serious issue that needs to be navigated wisely. On the other hand, it’s good to understand that inflation is historically linked to economic recovery from serious events like a pandemic. Leading economists view the current situation as a sign of a recovering economy, believing that things will correct themselves once supply catches up with consumer demand3. While this is a healthy long-term perspective, 65% of Canadians are experiencing significant stress about their finances right now4.

Below are some strategies that might help you worry less about the impact of inflation today and possibly even come out ahead when it all begins to normalize:

  1. Take advantage of low unemployment rates

    Part-time work is plentiful right now. Taking on another job could boost your income today, position you to broaden your skillset and increase your future earning power.

  2. Pay debt

    During inflation, money loses its value and consumers lose their purchasing power. Borrowers, however, may benefit because money has a lower value now than when they took out a loan. This essentially allows you to repay your debt at a lower cost. Now could be an excellent time to pay down fixed-rate debts such as mortgages and loans.

  3. Cut costs

    Cutting expenses is an excellent hedge against inflation. Start by reviewing your budget to prioritize your spending categories. You must buy food, heat your home and put fuel in your car, but there are several ways to reduce other costs. You could drop one streaming service or replace a costly hobby with a cheaper alternative. Call your insurance provider(s) to ensure you’re not paying more than you should, choose a fixed-rate energy plan, comparison shop and use coupons online and in-store. It all adds up, and once inflation calms down, you’ve established savings habits that will benefit your future.

  4. Invest wisely

    Invest wisely in sectors that may benefit from rising prices during inflation. Work with a financial advisor who can help you build, preserve and diversify your portfolio's value to keep your nest egg growing.

  5. Get support

    A trusted relationship with a financial advisor can put inflation in perspective for you. More importantly, it can inform your money management and savings strategies for a prosperous future.


We’re here to help you make the most of your money in any financial climate. Call us today.


Sources:

1. Nanos Research: Strong majority of Canadians worry more about higher prices for everyday goods rather than higher interest rates - https://nanos.co/wp-content/uploads/2022/01/2021-2043-Bloomberg-Dec-Populated-report-with-Tabs.pdf
2. Reuters: Canadian inflation hits 30-year high, boosting chance of early rate hike - https://www.reuters.com/business/canadas-annual-inflation-rate-hits-48-dec-highest-since-sept-1991-2022-01-19/
3. NY Times: Should You Worry About Inflation? Experts Weight In. - https://www.nytimes.com/2021/07/17/business/dealbook/inflation-questions-experts.html
4. The Globe and Mail: Two-thirds of Canadians worry their pay won't keep up with inflation, survey suggests - https://www.theglobeandmail.com/politics/article-two-thirds-of-canadians-worry-their-pay-wont-keep-up-with-inflation/



Copyright © 2022 AdvisorNet Communications Inc. All rights reserved. This article is provided for informational purposes only and is based on the perspectives and opinions of the owners and writers only. The information provided is not intended to provide specific financial advice. It is strongly recommended that the reader seek qualified professional advice before making any financial decisions based on anything discussed in this article. This article is not to be copied or republished in any format for any reason without the written permission of the AdvisorNet Communications. The publisher does not guarantee the accuracy of the information and is not liable in any way for any error or omission.

What our clients are saying...

  • When working with a financial planner, my expectation is to work with someone who is responsive to changes and who can devise a path forward as we age for the benefit of ourselves and our children. I valued the depth of detail and explanation along with the disclosure of all the variables at play. I would certainly recommend Anthony to my family and friends!

  • I was looking for a financial planner who could provide clarity and show me the best possible way to structure and plan for my retirement. Anthony’s expertise was clearly evident. He is professional, punctual, and answered all my questions and concerns. I would definitely recommend Anthony to my family and friends.

  • We expect a Financial planner to be thorough, detailed and have a strong understanding of their clients' needs. It was a pleasure working with Anthony and his team. He delivered a tremendous package and reviewed his findings in great detail. Anthony's attention to detail, solutions, recommendations and in-depth reports provides a great deal of confidence in his recommendations. We would absolutely refer our family, friends and associates to Anthony.

  • I expect my financial planner to review and discuss my financial goals along with how my goals can be achieved. I valued Anthony reviewing my investments and the projections of what they will equate to when I reach my eventual retirement. Anthony has certainly met my expectations and I would be happy to refer my family and friends.

  • My expectation was to be provided with the best possible advice specific to my situation (as it evolves) and to be provided with objective, evidence-based solutions which will provide me with the maximum financial benefit (and peace of mind). I valued the very thorough process of gathering all pertinent information regarding my estate, pension, income and expenses in order to produce a very detailed and fulsome projection of my current and future financial situation. I really appreciate the time Anthony has taken to answer all of my questions and provide sound advice based on my goals and concerns. I am really looking forward to continuing my investment and financial planning journey with Anthony. I would certainly recommend Anthony to my family and friends!

  • We valued receiving a detailed report and explanation of our finances. When working with a financial planner, we expect to have our questions answered with adequate detail and to have a plan developed to help grow our money. Our expectations were clearly met and we would be happy to recommend Anthony to anyone looking for a Financial Plan.