It's Your Money  

Tips to handle the impact of inflation

Inflation busters

Inflation has become a big concern for Canadians, as it appears it will be here for the long-term.

The Bank of Canada has projected inflation will remain above its target range of 1% to 3% until at least 2024. With rising costs, Canadians need to take action, if they haven’t done so already, to adapt to inflation and ensure their finances are secure.

Here are some strategies you can use to adapt to inflation:

1. Make a budget and stick to it—One of the best ways to prepare for inflation is to create a budget and stick to it. A budget helps you keep track of your expenses and allows you to identify areas where you can cut back. It also helps you save money and prepare for unexpected expenses.

2. Pay down debt—Inflation can make it difficult to pay off debt. As prices rise, so do interest rates, which can make it more expensive to service your debt. Canadians should prioritize paying down high-interest debt such as credit cards and personal loans. By reducing their debt load, they will have more money to save and invest.

3. Invest in assets that appreciate in value—Inflation can erode the value of cash and fixed-income investments over time. Canadians should consider shifting more of their portfolio to assets that appreciate in value, such as stocks, real estate, and commodities (if their risk profile allows). These assets tend to perform well during periods of inflation and can provide a hedge against rising prices.

4. Protect your purchasing power with inflation-indexed investments—Inflation-indexed investments, such as inflation-protected bonds, are designed to protect your purchasing power from inflation. These investments adjust their value based on the inflation rate, with the goal to ensure that your money maintains its value over time.

5. Consider earning additional income—With rising prices, Canadians may need to earn additional income to make ends meet. There are many ways to earn extra income, such as freelancing, starting a side hustle, or renting out a spare room. By earning additional income, you can offset the impact of inflation on your finances.

6. Shop smartly and save money—As prices rise, it is important to shop smartly and save money wherever possible. You should compare prices, shop for bargains and use coupons and loyalty programs to save money on everyday expenses. Also consider buying in bulk, cooking at home and cutting back on discretionary expenses to reduce your overall spending.

7. Diversify your investments—Diversification is an essential strategy for managing risk and maximizing returns. Investors should consider diversifying their investments across different asset classes, sectors, and geographies. That can help reduce the impact of inflation on their overall portfolio and provide a buffer against market volatility.

8. Build an emergency fund—Inflation can make unexpected expenses more costly. Canadians should build an emergency fund to help them weather unexpected expenses such as car repairs, medical bills, or job loss. An emergency fund should ideally cover six months of living expenses.

Whether you like it or not, inflation is a challenging economic phenomenon that you must adapt to. By being proactive in your strategies to tackle inflation, you can protect yourself and your family against the negative impact of inflation and secure your financial future.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.

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About the Author

Brett has worked in the financial advice industry for over 15 years and is designated as a chartered investment manager(CIM) and certified financial planner (CFP).

In 2014, Brett was appointed to the board of directors of FP Canada (the national professional body for financial planning) and spent seven years on the board, including his final two as board chair. More recently, he was appointed to the Financial Planning Standards Board (FPSB), which is the international professional body for this industry with a three-year term beginning in April 2023.

Brett has been writing a weekly financial planning column since 2012 and provides his readers with easy-to-understand explanations of the complex financial challenges that they face in every stage of life.

Enhancing the financial literacy of Canadian consumers is a top priority of Brett’s and his ongoing efforts as a finance writer and on the regulatory side through the national and global boards focus on this initiative.   

Please let Brett know if you have any topics that you’d like him to cover in future columns or if you’d like a referral to a qualified CFP professional in your area by emailing him at [email protected].


The views expressed are strictly those of the author and not necessarily those of Castanet. Castanet does not warrant the contents.

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