5 Simple Strategies to Manage Inflation in 2024

Living costs in Canada have been rising effectively over the past few years. From groceries to gas prices, managing a household budget requires more discipline than ever before. Here are five foundational tips to help you navigate your finances.

1. Track Your Monthly Expenses

The first step to financial health is awareness. Use a simple spreadsheet or a notebook to track every dollar spent. You might be surprised to see how much is spent on small, non-essential items like daily coffee or unused subscriptions.

2. Understand TFSA vs. RRSP

In Canada, maximizing your tax-advantaged accounts is crucial. The Tax-Free Savings Account (TFSA) allows your savings to grow tax-free, while the Registered Retirement Savings Plan (RRSP) helps defer taxes until retirement. Consult a certified financial planner to see which one suits your current income level.

3. Build an Emergency Fund

Financial experts recommend having at least 3 to 6 months of living expenses saved in a high-interest savings account. This fund acts as a buffer against unexpected events like car repairs or job loss.

4. Reduce High-Interest Debt

With interest rates climbing, carrying debt on credit cards can be detrimental. Prioritize paying off debts with the highest interest rates first. This strategy, known as the "Avalanche Method," saves you the most money in the long run.

5. Focus on Long-Term Goals

Investing is a marathon, not a sprint. Avoid reacting to short-term market volatility. Diversifying your portfolio across different sectors can help mitigate risk over time.

Disclaimer: This article is for informational purposes only and does not constitute financial advice. Please consult with a professional advisor before making investment decisions.