Five things to do to protect your financial resources

With the Liberal Party securing another term in the 2025 federal election, many Canadians are left wondering what that will mean for their personal finances.

Economists have repeatedly commented that the current government has overseen rising debt, persistent inflation and worsening affordability, and Canadians are bracing for that to continue.

While the election outcome reflects the will of voters, it also signals a continuation of the policies that have contributed to Canada’s current economic fragility.

For Canadians concerned about their financial futures, regardless of your political leanings, it’s essential to take proactive steps now to protect against the potential consequences of continued Liberal governance:

1. Tighten your household budget

Despite promises of affordability measures, Canadians have lived through years of high inflation, rising interest rates and increased taxation under Liberal leadership. Many middle-class families find themselves worse off than ever before with grocery prices, rent, and other essentials climbing steeply.

While the Liberals pledged to cut income taxes on the second bracket and expand $10-a-day childcare, those measures may be offset by other policy choices, such as continued deficit spending, which puts upward pressure on inflation and interest rates.

What to do:

• Conduct a thorough review of your monthly expenses.

• Eliminate non-essentials and build a leaner budget that assumes prices will continue to rise.

• Automate savings and consider using high-interest savings accounts or short-term GICs to protect cash from erosion.

2. Be cautious in the housing market

Housing affordability remains one of Canada’s most urgent crises and one that has significantly worsened in recent years. While the government is promising to eliminate GST on new home builds under $1.5 million and accelerate home construction, real estate experts are skeptical that these measures will meaningfully move the needle in the near term.

The Liberals have been in power since 2015 and housing affordability has deteriorated significantly in that time. Despite repeated promises, demand due to large increases in immigration continues to outstrip supply, and the cost of owning or renting a home remains out of reach for many Canadians.

What to do:

• Avoid speculative home purchases, especially in overheated markets.

• Consider renting if it allows for greater financial flexibility.

• For buyers, look into first-time homebuyer incentives but evaluate long-term affordability carefully.

3. Prepare for economic headwinds

Many financial analysts point to Canada’s growing federal debt and sustained deficit spending as red flags for long-term economic health. Add to that the risk of U.S. protectionist policies, particularly with U.S. President Donald Trump’s return to power — and the outlook becomes even more uncertain.

Government spending has provided short-term support, but without a clear path to balance, it could limit the government's ability to respond to future economic shocks. Ratings agencies have warned Canada’s fiscal position is weakening, which could eventually lead to higher borrowing costs for everyone.

What to do:

• Build or reinforce your emergency fund with three to six months of living expenses.

• Avoid taking on new high-interest debt.

• Diversify your investments to include inflation-protected and defensive assets.

4. Maximize existing government programs but don’t rely on them

Programs like the Canada Child Benefit, national dental care and proposed credit card interest caps are helpful for many families. But there's growing concern about how sustainable those initiatives are amid ballooning deficits and slower economic growth.

What to do:

• Take advantage of available benefits while they last but avoid relying on government support long-term.

• Use government funds to invest in long-term priorities like education savings or debt repayment.

5. Get professional financial advice

In times of uncertainty, expert guidance can make a significant difference. With another four years of potentially unpredictable federal economic policy ahead, a professional financial planner can help you build a plan that factors in tax changes, inflation and risk management.

What to do:

• Schedule an annual review with your financial planner.

• Ask specifically how proposed tax and benefit changes might affect your household.

• Rebalance your portfolio with a focus on capital preservation and income stability.

While Canadians may differ in their political views, the economic realities under continued Liberal leadership, including mounting debt, cost-of-living pressures and housing inaccessibility, require serious attention. Rather than waiting for conditions to improve, Canadians would be wise to take ownership of their financial security now.

The next four years may pose challenges but they also offer an opportunity to become more intentional with money, more resilient to economic shocks and more independent of government promises.

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