It’s 2023. Prices of everything are now much higher than before the COVID-19 pandemic. Groceries, fuel, housing, you name it, it costs more. So, what are some things you can do to make ends meet? Below are a few ideas.
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inflation
Countries tend to go through interest rate cycles and a higher interest rate ensures a better return on your hard-earned cash. Inflation, if not accounted for, could devastate your savings. A rise in the interest rate must be considered in conjunction with inflation in order to assess its actual impact on your savings. Here are a few things to consider when saving in a rising interest rate environment.
Most of us have heard our grandparents grouse about the high cost of goods these days. We’ve all heard phrases like this one: “In my day a cup of coffee was five cents!” Now we pay as much as $5 for our daily cup o’ joe at Starbucks. Of course, an argument could be made that your Grande Mocha Frappuccino should cost more than a plain cup of coffee, what with all the milk, sugar, and other ingredients added in. But even that plain old coffee will cost you more than $2 today at Starbucks, a pretty big increase from 1950 (when the price of a cup of coffee rose from one nickel to two at automats). And we have inflation to thank for these increases in the cost of goods and services over time. In case you hadn’t noticed, inflation occurs without fail. And it can have a major impact on your finances.
Guaranteed Investment Certificates (GICs), are a common savings vehicle used by Canadians. There are different types. Some are locked in for a specific period of time, while others are cashable at anytime.
GICs provide the following advantages:
-Your principal is guaranteed.
-For most GIC types, you are guaranteed a fixed rate of interest for a specific period of time.
-They help people to save who would otherwise spend their money. If their money is locked away, they have no way of accessing it, making it impossible to spend it on a whim.
Inflation, the ever -increasing cost of everything over time, makes a significant impact on your savings. In a normal, healthy economy, the inflation rate usually hovers around 3%. Essentially, everything goes up in value except your money. This is an important concept to understand as inflation impacts your purchasing power.