For many Canadians, 2022 was a challenging year due to soaring inflation, the slowdown in the economy, and sharp rises in interest rates. Unfortunately, 2023 is expected to cause more significant problems for many individuals and households. With rising prices of goods and services, Canadians are struggling to keep up with plummeting purchase power, causing financial strains for many.
According to the Business Development Bank of Canada (BDC), a recession is still avoidable for the Canadian economy, but there is much skepticism. Canada has faced many challenges, but the economy has been resilient. However, the uncertainty about how the current economic conditions will respond to tighter monetary policy remains a concern. So, how can you save yourself and protect your finances in this economic downturn? Consider the following tips to live cautiously in 2023.
Stay Up-to-Date on Economic State
Canada’s current economic state has been uncertain for the past year, so it is constantly changing. It’s important to stay up-to-date on the economic state to make informed decisions and avoid financial constraints. This involves researching the current inflation rate, learning about what affects interest rates, reading about forecasted economic growth, and understanding the impact of monetary policies.
Many resources you need to research are readily available online, but it’s important to trust only credible platforms. Absorbing information from unreputable platforms can cause unnecessary stress and result in unfavourable financial decisions. Use government and official sites for banks and other associations, and follow the news to stay informed.
Slash Unnecessary Expenses
Although it can be challenging to reduce your expenses when products of goods and services continue to skyrocket, it is one of the best approaches to controlling your finances. The first step to living cautiously in today’s uncertain climate is creating a reasonable budget and updating it as necessary. When creating the budget, look for ways to minimize your costs. You can avoid spending money on unused subscriptions, use coupons when shopping, and negotiate bills for utilities and other services.
Continue Building an Emergency Savings Account
According to a Chartered Professional Accountants (CPA) of Canada survey, “only a little over half of Canadians say they have an emergency fund stashed away.” The respondents also mentioned that saving money was a significant cause of stress for 47 percent of Canadians, as many cannot save money from their income after taxes.
An emergency savings account is crucial for financial stability as it offers support when you need financial help. Although it can be challenging for many households to build this fund, it’s important to contribute whatever amount possible each month to avoid financial shocks in the long term. Add minimal funds each month and gradually build the account when possible.
Get Familiar with Borrowing Options
It’s always good to be prepared for unforeseen financial circumstances, and getting familiar with borrowing options is a great start. When you familiarize yourself with borrowing options ahead of time, you protect yourself from seeking unfavourable loans during an emergency. It also prevents you from spending money from funds dedicated to other expenses, such as your children’s education.
Learn about your borrowing options by comparing different lenders and getting familiar with interest rates and loan terms. Create a shortlist of licensed providers offering simple installment loans in Canada with flexible borrowing terms. This can help you make informed decisions when you need an installment loan and prevent you from scams or fraudulent lenders.