We’ve had three straight years of personal finance drama, but 2023 may be the worst of them. Inflation has been running hot for two years, interest rates are peaking and the number of consumer insolvencies has risen sharply. A mid-year financial checkup seems a good idea amid all these challenges. For help with that, I turned to certified financial planner Jackie Porter. Ms. Porter has been in the financial industry for 25 years and says one of her key focuses is empowering women financially.

Q: Inflation and high interest rates are two of the biggest personal finance challenges right now – what questions are you asking to see how people are holding up?

A: Mid-year checkups help us get a better understanding of how we’re tracking and determine if we need to shift our budgets for the second half of the year. At minimum, people should be doing a quarterly check-in. By regularly looking at your finances (i.e. what’s coming in and what’s going out), you become more aware of where your money is going when it comes to spending and expenses, which allows you to make smarter decisions to stay on track. I always encourage my clients to ask themselves: Is my money working hard for me, and how can I make it work harder? Am I using the right tools and resources to manage my finances? Are there non-essential spending expenses I can cut back on?

Q: It seems that FOMO – fear of missing out – is a big problem these days. While some households are struggling and cutting back, others are spending on restaurant meals, concerts, travel and more. What suggestions do you have for resisting FOMO-driven spending?

A: Here are three tips to put into practice this summer:

• Don’t be afraid to say no, or suggest new ideas: It’s important to set financial boundaries with family and friends when you can’t afford an activity, or suggest something new. Suggesting a more affordable alternative like a backyard movie night or a picnic in the park will help alleviate some of the pressure you feel this summer.
• Use tools to keep track of your spending: One of the best ways to stick to your budget is by tracking your spending. Many Canadians aren’t using the free budgeting resources and apps that are available at the financial institutions they bank with, leading to overspending. The great news is that there are numerous easy-to-use resources that can do the work for you.
• Point programs are your friend: While summer activities can get expensive, it’s important to look at other avenues to see where you can stretch your dollar further.

Q: If you have to renew a mortgage in the second half of 2023, what can you do to prepare for higher payments?

A: Don’t wait until the last minute: Now is the time to contact your lender to determine your best options. This could look like increasing your amortization, taking a shorter-term mortgage, or potentially refinancing other debts you are holding into your mortgage to reduce your monthly payments. Also, stay on top of your spending. Keep a close eye on essential expenses versus non-essential spending so you know when you’re approaching a spending limit and need to cut back.

Q: High interest rates are hard on borrowers, but great for savers. What do you look for in deciding if people are saving enough?

A: There isn’t a formula for whether or not you are saving enough. It all depends on your individual or household residual income after essential expenses – that’s what determines how much you can put toward saving.

Q: What about including your job and salary in your mid-year financial checkup? Is it feasible to address your financial pressures by asking for a raise or finding a higher-paying job?

A: A mid-year checkup is not just about your expenses, but also how your income tracks with your everyday lifestyle. So, in some respects, asking for a raise or seeking a higher paying job helps you focus on areas of your finances that you can control. But I wouldn’t only focus on a raise when determining budgets. Budgeting should focus on your daily life and expenses, and be adapted if it doesn’t meet your needs. Whether that’s making food at home instead of a restaurant, there are ways to adapt your budget without finding a higher-paying job.

ROB CARRICK
PERSONAL FINANCE COLUMNIST
The Globe and Mail, July 18, 2023