Are you worried about the economy?

Two-thirds of Canadians are worried about their finances, according to a recent economic poll conducted on behalf of two non-profit organizations, the Financial Planning Standards Council (FPSC) and Credit Canada. Titled The Kitchen Table Forecast, the Leger poll asked 1,515 Canadians about a series of ‘kitchen table’ issues – financial concerns that confront people on a daily basis, such as bill payments and debt, the cost of living, job security and bankruptcy.

The results show Canadians feel stressed about their finances and are often at a loss to improve their situation. This hopelessness can cause people to do nothing, and possibly make their condition worse. Uncertainty about an ever-changing job market and economy only undermines the average person’s confidence and ability to handle the ebb and flow that life inevitably presents.

Shawn Todd, partner, VP and Certified Financial Planner with Ecivda Financial Planning Boutique, is also concerned about the potential state of many household plans. ”It comes as no surprise that many families just shut down in some mode of financial paralysis when these issues and stresses arise.”

According to Todd, potential home and condo buyers can better position themselves for the home they are excited about by asking themselves a key question: "Can I afford this new purchase?"

“It’s easy to fall in love with a new home or building. At the end of the day, you need to be able to know that you can afford it along with the bills that come with it,” says Todd. “Quite often, we are asked by clients, ‘How do I know if I can afford this new mortgage payment?’ It would always be a great step to take the mortgage numbers you are working with, and stress test them in this fashion:How would you feel if the value of your potential property was 10-15 per cent less in a year after the purchase, and your mortgage payment was one- to two-per cent higher? If those numbers work nicely in your plan, and your budget still works, you’re most likely sitting in a very comfortable situation.

“Running this exercise may allow you to worry less about 2019’s economy, and how it may look in the next two, three, and four years. I encourage our clients to check their budget and note items like lines of credit, credit cards, their next car purchase, and their mortgage payment can all change fairly quickly during interest rate hikes.”

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