Be smart about how you spend and borrow in the months ahead because your living costs will soar.
We are entering a tricky stretch of the pandemic – in a personal finance way. There has been a lot of upside so far for the fortunate households that haven’t experienced a drop in income, as some definitely have. Now, it’s time to prepare for some downside – specifically rising prices, the likes of which we haven’t seen in decades.
Gasoline prices soared to record levels in some parts of the country heading into the Thanksgiving weekend, and natural gas prices are spiking as well. Inflation over all is well established, while wage increases lag. A big reason for inflation is the disruption in global supply chains, a problem that is going to make for some frustrating holiday season shopping.
Overlaying all of this is a further reopening of the economy that will present opportunities to spend that people haven’t experienced since early 2020. For example, sports stadiums, concert venues and cinemas in Ontario are open to full capacity, and the Canada-U.S. land border is reopening for fully vaccinated Canadians early next month.
Billions of dollars in savings were parked in bank accounts during the pandemic, houses have jumped in value, and stocks have done likewise. But even well-off households can experience a collision between higher living costs and amped-up spending.
Some thoughts on how to prepare: One, ration your splurges. Don’t try to make up for lost time through the quantity or extravagance of the events or trips you book. This holiday season doesn’t have to set a new family standard for spending.
What you should do with your holiday shopping is start, like, today. I tweeted a picture on Tuesday of an Ottawa home reno store with a huge Christmas display and got lots of amusingly mocking comments. But with global supply chains disrupted by the pandemic, what you see on store shelves today might not be restocked for months. That’s an argument for buying now, not later.
As with your spending, contain your borrowing. The Better Dwelling blog, always a good read if you follow the housing market, reported recently that borrowing through home equity …….