Here's how the falling loonie may impact your personal finances
I’ll explain how the falling loonie could affect your personal finances, and share some helpful tips for making your money go further.
HOW THE FALLING LOONIE COULD IMPACT YOUR FINANCES
This, combined with the falling value of the loonie, could have some negative effects on the everyday finances of Canadians.
Higher food prices
If you’ve visited your local grocery store recently, then you’ve surely noticed that the cost of food and other essentials has increased due to inflation. As the value of the loonie drops, buying power also decreases, which could result in spending more money on groceries. Be sure to budget accordingly to accommodate for this.
More expensive foreign products
While Canada is certainly a manufacturing hub, many of the products that we use daily 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 TVs manufactured overseas
- Fuel and oil imported from overseas
When the value of the Canadian dollar falls, we’re not able to buy as much with it. This means that everyday items and essentials may increase in price, which can have a very tangible effect on our monthly account balance.
Other imported products that could become more expensive are home goods and clothing.
Fewer shoppers and clients for small businesses
If you own a small retail store or a service-based business, you could see a reduced number of customers and clients.
Additionally, as a small business, you’ll likely find that your daily operating costs are increasing as office supplies and other essential business items become more expensive as well.
TIPS TO COUNTERACT THE FALLING LOONIE
Now that you have a better idea of how the falling loonie could affect your finances, here are some practical tips that can help you stay on top of your money.
1. Pay off high-interest debt quickly
If you have a loan or a credit card balance with a variable interest rate, then you should focus on paying down your debt as quickly as possible. If your lender or credit card company decides to raise your interest rate, then you could end up having to pay more money as a result.
The more money you pay towards your principal balance now, the less money you’ll have to pay towards interest in the future.
2. Purchase essential groceries in bulk
Buying essential groceries in bulk is always a good way to save money. Today, however, I’d argue that it’s more important than ever. Make use of your freezer space to store perishable foods and stock up on non-perishable items such as canned goods.
The amount you’ll save by shopping with wholesale grocery suppliers far outweighs the annual membership costs to visit these stores.
3. Hold off on major expenses
As essentials become more expensive, I recommend holding off on major expenses for now. It may be tempting to buy that new car, go on that Caribbean vacation, or renovate your kitchen. However, making these purchases could negatively affect your ability to afford the more important things.
4. Cut back on non-essential purchases
Aside from avoiding major expenses, there are other ways Canadians can save money as their expenses increase, such as:
- Eating at restaurants less frequently
- Finding free sources of entertainment, such as hiking on your local trails, getting a library card to borrow free books and DVDs, or listening to podcasts
- Getting rid of expensive memberships
- Dropping lawn care or snow removal services
- Thrift shopping instead of purchasing new clothes
The decreasing value of the loonie is undoubtedly going to affect most Canadians’ wallets. As long as you’re smart with your money, save more than you spend, and focus on the essentials, 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 daily Canadian readers on his Wealth Awesome website.
Do you have a question, tip or story idea about personal finance? Please email us at email@example.com.
Food prices in Canada will continue to escalate in the new year, with grocery costs forecast to rise up to seven per cent in 2023, new research predicts.
Nine out of 10 Canadians believe there could be a recession in 2023, according to a new national survey, with four out of 10 calling it 'likely.'
At first glance, it might seem like the deals have never been better as posters in store windows and online ads trumpet a steady stream of holiday sales. But some consumers say the discounts are more hype than real.
With the 2023 post-secondary education application deadlines approaching, many students across Canada are looking for alternatives to university and college, leaving parents anxious taking a ‘gap year’ could mean they never return to school.
Wouldn't it be nice to never have to work again? While this may sound like a dream to many, it is entirely possible. CTVNews.ca personal finance contributor Christopher Liew shares a handful of helpful tips on how to potentially achieve financial independence.
Recent homebuyers with variable-rate mortgages will find the adjustment to higher interest rates more painful, said Bank of Canada senior deputy governor Carolyn Rogers.
Buying your first car can be as exciting as it is daunting. Whether you’re buying a car off the lot from a dealership or purchasing a car in a private sale, contributor Christopher Liew shares in an exclusive column for CTVNews.ca a few basic tips that you should always keep in mind.
In March 2022 alone, food banks across Canada had 1.5 million visits, a 15 per cent increase from the year prior and the highest recorded usage on record.