_{By Bromwich+Smith Staff | 1143 words | Reading Time: 5 minutes and 42 seconds | Date: 2023/06/16}

We continue to hear from Canadians that they are feeling over extended, overloaded and overstressed. To add to that, the Bank of Canada recently announced that they will be raising the key interest rate by 25 basis points. Previously, the last rate increase from the Bank of Canada came in January which brought the key rate to 4.50%, making the current overnight rate now 4.75%. 

Continued increased interest rates, supply and demand creating product shortages, and overall price hikes are having major implications for Canadians. We can see this affecting daily lives, financial choices, and future plans. However, by planning for the future now, with practical budgeting tips and strategies we hope to help you cope with these economic challenges. 

The Impact on Borrowing: 

Increased interest rates mean that borrowing money becomes more difficult. For those with no credit or poor credit, it is going to become more expensive than those who have good to excellent credit scores. A simple step you can take now is to review your credit score and see where you stand. Then, review your borrowing needs. What you need credit for, and how much you need to obtain, and look into all your affordable options. For some, this may be refinancing current loans at a lower rate, consolidating your debt, or even negotiating directly with your creditors.  

Reviewing Savings and Investments: 

Higher interest rates can make savings accounts and fixed-income investments more enticing. It may be time to review and adjust your savings strategy and consider moving funds to high-yield savings accounts or diversified investment portfolios that offer better returns. We suggest consulting with your financial advisor for the best options, based on your risk tolerance, and overall savings goals.  

Revise Budgets: 

Any Increase in an already tight budget can cause major implications. If you are concerned about how this new increased rate may affect your current bills and expenses, it is time to take a closer look at your budget. Review your expenses and see where you can cut back short term, or long term to make room for the increased bills. You will need to prioritize what is essential, and take a serious look at your non essential spending. This short term pain can help you not go into further debt.  

Coping with Supply and Demand Shortages  

We have all been there, you are looking for an item on the grocery shelf and it seems like weeks go by before you see it stocked. When you do, the price has increased, and you cant believe you have to pay this new price. Maybe you are seeing this on a larger scale, with car purchases or real estate. All over Canada we are seeing increased prices in rentals, which are forcing many to purchase instead of renting. This is leading to short supply, low days on market, bidding wars and an overall sellers market. If you are falling on the buyers side, this can lead to frustration, and needing to overextend your credit to qualify for a home which months previously would have sold at a much lower price.  

Research and Planning: 

Stay informed about the supply and demand that impact your lifestyle. Not everyone will be affected by the same things, but  product availability, anticipated shortages, and potential alternatives are all things you can do some quick research on. 

You can help yourself by planning ahead by stocking up on essential items when they are available and on sale. Think about the item you are purchasing and its shelf life, or consider bulk purchasing options if specific item shortages would truly affect your life. This is not a green light to go into debt creating a stockpile, or to hoard items.  

Alternative Shopping Strategies: 

Consider all of your shopping options, which can include  online and in store options. This may increase your chances of finding the items you are looking for.  

Flexibility and Adaptability: 

While it may be hard to consider not being able to get your favorite snack item, brand of running shoes or needed baby items you may need to review other options. By having an open mind and exploring new brands or products you may find a new favorite, and it may be a better price point or readily available. Practice smart consumption of your most loved products. If you truly can not image not having a specific cream, bug spray or household item consider reducing how much you use it until you can secure a back up item.  

Managing Overall Price Hikes  

1. Smart Shopping: 

When possible, compare prices across different retailers before making purchases. This will help you save money, and will help you take a step back and decide if the item is a need or a want and if you truly need to make the purchase. Many of your favorite stores or brands will have loyalty programs, promotional offers, and coupon codes that can help lower costs. By taking the time to research these offers, you may find yourself saving more than expected.  

2. Prioritizing Essential Expenses: 

Review your budget, and outline your spending priorities.  Separate needs from wants to make more informed purchase decisions. If your morning coffee is a non starter, maybe there is something else you are willing to reduce in the short term. These cut backs do not need to be permanent changes, but you may find that you do not miss it once it has been cut out.   

3. Exploring Cost-Saving Measures: 

Research cost-saving strategies such as bulk purchasing and meal planning to reduce your take out purchases. If you constantly find your self ordering in, or going through the drive thru review the receipts. You may be surprised to see how quickly those purchases add up, and with a little planning you can quickly reduce those bills.  

Inside your home, you can save on utility bills by practicing energy-efficient habits and exploring alternative providers if available. This could be as simple as changing out lightbulbs, unplugging electronics, and reminding others to turn off the lights when they leave a room. Ensure your furnace and in house fans are turned to summer mode, and keep the curtains closed during prime sunlight hours.  

Browich+Smith understands how difficult it can be to navigate  increased interest rates, supply and demand shortages, and overall price hikes. With a little research, time and willingness to try practical strategies, these hikes will not affect you as much as you originally anticipated. 

If you find yourself  struggling with overwhelming debt  Bromwich+Smith has a number of debt relief strategies to help you regain control of your situation. Reach out today and find out if you qualify for debt relief programs. Bromwich+Smith’s Debt Relief Specialists are available by phone at 1.855.884.9243, or request a call back at contact us page.