Canadians are still facing extremely turbulent financial times, with the sting from decades-high rates of inflation, coupled with rising interest rates causing monetary worries and stress across the board. 

Many ordinary families are concerned about how they’re going to make ends meet, and the feeling is that after the experiences of the last few years, some good cheer and optimism would be nice. 

On November 21st 2023, the government gave its financial update for the Fall and announced its plans for the coming year. 

Bank of Canada governor Tiff Macklem has warned that “on aggregate, spending plans for all levels of government over the next year would risk fuelling inflation” Mr Macklem has also called for a fiscal policy to complement monetary policy. Macklem also stated that growth in the Canadian economy is “also slowing under the weight of high interest rates, which threaten government revenues”.

Coupled with this is a warning from Robert Asselin, the senior vice president of policy at the Business Council of Canada. He has stated that the federal government does not have a “good track record when it comes to fiscal restraint”. Taking aim at the country’s Finance Minister, Chrystia Freeland he said that “Unfortunately, in the past, every time Minister Freeland said ‘fiscal restraint,’ she has come up with huge spending.” 

Ordinary Canadians are worried about the cost of living, and the imminent threat of a recession, despite the fact it has so far yet to materialise. 

Given all this, what practical steps can be taken to ensure that you can enjoy the holiday season, but go into the new year with a relatively clean bill of financial health and perhaps even some savings in the bank? 

We’ve got together with some finance experts to get their knowledge and know-how on how to make things much more monetarily healthier for you.

What are some great tips to get you in good financial shape?

“Addressing holiday overspending, rising prices due to inflation and the approaching tax season should be top priority, advise CPAs

There are a few ways to deal with debt. You can find new sources of income, cut back on spending and establish a realistic debt payment plan or use your savings (which experts say you should try not to do).” Sophie Nicholls-Jones writing for Chartered Professional Accountants Canada

For those considering alternative financial solutions, exploring options with a private mortgage lender can offer flexible and tailored approaches to managing debt, particularly in these challenging economic times.

What are some great tips for staying on track financially? 

“Setting financial goals is a great start. The crucial next step is committing to them.

Simplify your banking: Use a single credit card and take advantage of budgeting tools or apps like Mint or You Need a Budget, so it’s easy to track your progress in real-time

Have an accountability partner: Much like having a gym buddy, working with someone like a financial planner can help ensure you’re sticking to your plan

Celebrate small wins: Trying to get out of debt and turn around your finances is hard work, so don’t forget to treat yourself when you hit your markers

Focus on one thing: If it all feels too overwhelming, just take action on one thing in 2024 so you’re not in this same scenario a year from now.” Farhan Devji journalist, writing for Yahoo News

Do we need to look backward to move forward with our finances?

“Review the past year and set action points! The most important part of moving forward is looking back. Start by reviewing the last year from a financial perspective, working through what went well, what progress you made, and any relevant context to bring meaning to what happened. Then think about things that didn’t go so well and the relevant context there — for example, did you lose hours at work, or did you have a period without a full-time income? All of that context is important for understanding what you have to work with. You might want to journal out your thoughts and feelings about money to release any baggage you’re carrying, or you might want to do a more strategic audit that focuses more on the numerical changes to your financial situation.” Emma Edwards writing for PocketSmith

What is the single most important thing people can do to take control of their finances?

“The single most important thing people can do to take control of their finances is to take control of their money mindset.  Your financial results are a direct reflection of your beliefs about money.  We adopt beliefs from our parents, our education and our environment and ultimately that belief system impacts our relationship and results with money.  In order to take control of your finances you must upgrade your money mindset just like you would upgrade your computers operating system to improve its functionality.” Stacey Berger, Transformational Coach for Business & Life at staceyberger.ca

What advice would you offer parents who are struggling to make ends meet but still want to make vacation memories with their children?

“My wife and I and our son were a young family once and had the same struggles many families face today in trying to balance the bills and the making of fun memories. In the early days our family trips consisted of loading up the family car with our tent and some camping gear and off we went to the nearest campground. We went fishing, tubing down rivers, hiking and enjoyed countless evenings around the fire. I then decided it was time to retire the tent. I rolled it up and tossed it in a dumpster. Now that’s a memory. Make it a priority to set aside a few dollars each month so you can spend this money later. Cut some of the monthly expenses like cell phones, Netflix, and eating out so that you can invest in your family because before you know it, they are gone.” Willis Langford, Founder at langfordfinancial.ca

What advice would you offer to someone who wants to set up an effective budget?

First I would distinguish the difference between tracking the expenses which is NOT really a budget. But it is a valuable piece of budgeting. Start each month proactively by outlining a budget plan (based on your tracking). This is your “Windshield Approach” to budgeting versus the “Rearview Mirror Approach” looking backwards. Outline all your Fixed Expenses first (same amount due every month). If your credit card payments are pretty fixed add those at the top. Also include some emergency savings as a Fixed Expense. Next Outline your Fixed Variable Expenses. These are also Fixed and show up every month but vary, like groceries, utilities, gas, meals out, therapy etc. Finally, consider all the “Other” spending that happens: personal care, gifts, medical, café’s, household, kids activities, pets etc. How does this bottom number compare to your take home income? Since you outlined this before the month started, if your bottom number is in the red, go back and make adjustments proactively in the beginning. Judy Lawrence, Budget Coach and Counselor, Author, and Founder of moneytracker.com.

How can budgeting help families who are struggling with the cost of living crisis?

The cost-of-living crisis is causing huge financial strains on Canadians. Budgeting can help families plan for how to get from one pay day to the next without running out of money or having to use credit. Having a plan on how to allocate funds can help relieve the stress and anxiety that tight finances have on people. It is important to budget and identify how much money we have available for things like groceries, gas and clothing so we don’t overspend or rely on credit. Once you budget and know how much you can afford, it will help you become more aware of where you can cut back to keep in budget. Budgeting can help families prepare for the unexpected as well by setting aside smaller affordable increments of funds each payday to help offset an unplanned expense. Put the credit cards away and start using your debit only and see how it forces you to think before you spend. Budgeting is the only way to plan for your family’s financial future and if you can’t balance your budget its time to get some free help from a professional such as a Credit Counsellor. Lauren Holwell, Executive Director at Credit Counselling Newfoundland & Labrador

What is the first step you would recommend for anyone who feels their debts are out of control?

The initial step towards financial recovery is a comprehensive assessment of their current financial situation. I would strongly recommend initiating the process by conducting a thorough examination of one’s income, expenditures, and outstanding debts. This involves creating a detailed budget to gain insights into where the money is being allocated and identifying areas where expenses can be curtailed. Simultaneously, compile a comprehensive list of all outstanding debts, including creditors, interest rates, and minimum monthly payments. This meticulous evaluation serves as the foundation for formulating an effective debt management strategy. Subsequently, individuals can prioritize their debts based on interest rates and devise a realistic repayment plan. Seeking professional financial advice or credit counseling services can also be beneficial in navigating this process, as experts can offer tailored solutions and negotiate with creditors on behalf of the debtor. Syed Murtaza, Managing Director at Naail & Co Chartered Certified Accountants

How can an energy-efficiency focus help reduce your monthly expenditure?

The greatest impact on a homeowner’s monthly expenditure comes when the house itself is constructed using cost-effective, energy-efficient assemblies and details, and accounting for the local climate and site. High-performance homes that are built or renovated to exceed the basic code requirements might cost a bit more up front, but they offer homeowners significant savings over the long term. They use less energy for heating and cooling, which results in dramatically lower power bills and because they use less energy, they require fewer solar panels to achieve Net Zero, saving on the cost of equipment and installation. A highly efficient house is also more durable. By limiting air leaks and exposure to moisture, they can lower the risk of mold and mildew, rot, and structural failure which are huge potential financial pitfalls for homeowners. Naryn Davar-Timbre, Partner and Director of Business Development at Passive Design Solutions.

How can a growing family cope with the increasing cost of living?

Budgets are the best way to track money coming in and flowing out, but we often see people underusing this tool! Take time each month to review and prep. Start by reviewing the previous month’s spending, then set your budget for the upcoming month. Then, track all your income and spending throughout the month. If you find yourself going over the budget you set, it’s good to distinguish between the needs and the wants. Prioritize the needs and start cutting the wants. Some of our favorite ways of finding costs to cut include bundling up services like cell phone family plans and subscriptions and using one of the many free apps that are available too compare prices when shopping. Ariane Fleischmann, Director, Communications & Advocacy at Family Services of Greater Vancouver

How can keeping good financial records help families manage their money?

Keeping good financial records is a crucial aspect of managing family finances in Canada. By maintaining organized and accurate records of income, expenses, and assets, families can gain better control over their finances, make informed decisions, and work towards their financial goals. It enables budgeting, tax compliance, debt management, and effective financial planning. Implementing best practices for organizing and securing financial records ensures that families have the necessary information at their fingertips to make sound financial decisions and achieve long-term financial stability. So, start today, and take control of your financial future by keeping good financial records. Dellando Farquharson at BOMCAS Canada

What advice would you offer for families who are currently renting but want to buy their first property?

My advice to families looking to transition from renting to buying their first property is to plan ahead, even before having the down payment. It’s crucial to sit down with a real estate broker and a financial advisor, preferably a mortgage broker, to assess their current situation, discuss property preferences, and create a strategic roadmap for the journey ahead. Alp Perez, Residential Real Estate Broker at realtormontreal.ca

What advice would you offer to someone with a low credit score who wants to take out a mortgage?

Time is your friend. The more time we have before the mortgage needs to be put into place, the more time we have to try and see if there is small tweaks and changes that can increase your score before we have to approach a lender. The most common reason for a low credit score is because of over-utilization. If possible, lowering your balances is the quickest way to see an increase in the credit score. Be mindful not to apply for too much new forms of credit (vehicle shopping,  new credit cards, etc.) as each time you apply, your credit is checked and affected.

If there is simply no time or way to increase your credit score before the mortgage is needed, you may need to do a short-term mortgage, typically 1-year term, with an alternative lender who will work with you to repair and improve your situation so that at renewal in a year, you are hopefully able to move back to a traditional bank lender. Sherry Corbitt, Mortgage Broker at homelifemortgages.ca

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