Smart Strategies for Thriving Amid Financial Challenges

Financial Survival Amid Uncertainty

It has been said that the only certainty in life is uncertainty. Well we are definitely living in uncertain times. Having been through a devastating pandemic we’re all returning to normal, but it really isn’t the normal we left behind. The future certainly holds some surprises that will make financial planning more challenging than ever before.

We are living with higher prices caused by inflation and a higher cost of living in general. Most people are already experiencing the consequences of higher inflation.

Consequences of Government Actions

Our government went heavily into debt to fight the pandemic but what most don’t realize is that we all have to share the burden of that debt which will mean more and creative ways to tax people. Perhaps the tax break on selling your principal residence will end with a new tax. Higher income tax brackets are inevitable.

Like the Old Age Security, the Canada Pension Plan may end up being clawed back when your income exceeds a capped amount. Could they raise the eligibility age to collect government pensions? France has seen violent riots over this issue.

Don’t forget our brave first responders such as nurses, care workers, paramedics, firefighters, and police. These unionized groups will have contracts to renegotiate in the future, and a raise in salary will be demanded. With record high inflation the current standard for salary raises is approaching double digits. We, the taxpayers, must somehow fund all those expected salary increases.

Government Promises

Our government has made promises without determining how to pay for them. Daycare will be subsidized, climate change requires action, First Nations are receiving billions in compensation, and healthcare must be upgraded from hospitals to retirement homes to long term care homes. Mortgage rates have risen as the long overdue historically low interest rates are now in the past. For those of us old enough to remember the 1980’s mortgage rates have been known to rise to double digits.

Keep More of Your Money

Your ability to keep more of your hard earned money will be challenged more than ever. You must keep your resolve and be all the more determined to save for today to ensure a better future for tomorrow. But how?

Despite the constant need for the government to tax us mercilessly there are programs to help you save. The Registered Retirement Savings Plan and Tax Free Saving Account are your best alternatives to ensure tax sheltered dollars can grow and compound. Many companies offer pension plans to their employees with matching contributions. It’s an offer of free money that too many people simply don’t sign up for.

It’s never been easier to open your own investment account and manage your financial affairs. Using the internet you can link a bank account to an investment account and self-manage your RRSP, TFSA and non-registered investments. With “just enough” knowledge you can select safe, well diversified, low fee long term investments to help create a secure retirement. For examples of these all-inclusive well diversified investment options please see my article A Concise Guide to Financial Funds.

Just as life evolves to adapt to harsh conditions, you must also adapt to change. Your financial survival depends on it.

Water BarrelThe BalanceIn my E-books (“Water Barrel” and “The Balance”) I discuss simple methods to live sensibly for today, take charge of your financial affairs, and invest safely for the long term. For more information please visit David Penna Amazon.

As always, I am not a qualified financial advisor. I just relate financial management to my own experience which may not resemble yours at all. Advice is frequently worth exactly what you paid for it. Most of mine came from expensive experiences.

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