Tips for making your money go further amid inflation
On September 23, the Canadian dollar traded as low as 73.69 US cents. That’s quite a drop from a high of 80 cents earlier in the year.
I’ll explain how the falling spinner could affect your personal finances and share some helpful tips on how to get your money further.
HOW THE FALLING LOONIE COUND AFFECTS YOUR FINANCES
The World Bank recently released a report indicating that Canada could be heading for a global recession along with the rest of the world in 2023.
This, along with the declining value of the loonie, could have some negative effects on Canadians’ day-to-day finances.
Higher food prices
If you’ve recently visited your local grocery store, you’ve surely noticed that the cost of groceries and other essentials has increased due to inflation. When the value of the loonie goes down, so does purchasing power, which could lead to more money being spent on groceries. Make sure you budget accordingly to account for this.
More expensive foreign products
While Canada is certainly a manufacturing hub, many of the products we use every day are imported from overseas. According to the Canadian Encyclopedia, here are some of the most common Canadian imports:
- Car parts for European or Asian import vehicles
- Electronics such as phones, laptops, and televisions that are manufactured abroad
- Fuel and oil imported from overseas
- plastics
If the value of the Canadian dollar falls, we won’t be able to buy as much with it. This means that everyday items and essentials can increase in price, which can have a very noticeable impact on our monthly bank balance.
Other imported products that could become more expensive are household goods and clothing.
Fewer buyers and customers for small businesses
If you own a small retail store or service business, you may see fewer numbers of customers and customers.
Additionally, as a small business, you will likely find that your day-to-day operating expenses increase as office supplies and other essential business items also become more expensive.
TIPS TO COUNTER THE FALLING LOONIE
Now that you have a better idea of how the falling spinner might be affecting your finances, here are some handy tips that can help you stay on top of your money.
1. Pay off high-interest debt quickly
If you have an adjustable rate loan or credit card balance, your focus should be on paying off your debt as quickly as possible. If your lender or credit card company decides to increase your interest rate, you may have to pay more money.
The more money you deposit into your main balance now, the less money you’ll have to pay in interest in the future.
2. Buy essential groceries in bulk
Buying essential groceries in bulk is always a great way to save money. Today, however, I would argue that it is more important than ever. Use your freezer space to store perishable foods and stock up on non-perishable items like canned goods.
The amount you save by shopping at grocery wholesalers far exceeds the annual membership cost of visiting these stores.
3. Hold back on larger expenses
As essentials become more expensive, I recommend holding off on larger expenses for now. It may be tempting to buy that new car, go on that Caribbean vacation, or remodel your kitchen. However, these purchases could negatively impact your ability to afford the more important things.
4. Cut down on unnecessary purchases
Aside from avoiding major expenses, there are other ways Canadians can save money when their spending increases, such as:
- Eat less often in restaurants
- Find free entertainment sources, such as B. Hike your local trails, get a library card to borrow free books and DVDs, or listen to podcasts
- Away from expensive memberships
- Drop lawn care or snow removal
- Shop sparingly instead of buying new clothes
FINAL TIPS
The declining value of the loonie will no doubt affect the wallets of most Canadians. As long as you manage your money wisely, save more than you spend, and focus on what matters most, you should be able to stay on top of your personal finances.
Christopher Liew is a CFA charterholder and former financial advisor. He writes personal finance tips for thousands of Canadian readers on his Wealth Awesome website.
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