Adrian Wyld/The Canadian Press
 
 

We’ll know the new Liberal government is succeeding in its mission to build up the Canadian economy when anxiety about the cost of living eases in a meaningful way.
 
 

Right now, living costs are the top source of financial stress. There is a widespread feeling of falling behind in this country, and addressing it should top the new government’s economic agenda.
 
 

Close to 80 per cent of 6,179 adults surveyed in February by the Financial Resilience Institute said increases in the cost of living have outpaced income growth in their household. That’s down from 84 per cent last June, so anxiety is at least easing a little. But the feeling of falling behind is still far too prevalent.
 
 

Inflationary increases for groceries and expensive housings and rent explain a lot of the unhappiness about living costs. The inflation rate has declined to normal levels and home prices are weakening in some of the most expensive markets in the country. Unhappiness about living costs persists because of the cumulative effect of past inflation, and a sense that incomes aren’t increasing enough.
 
 
 

This is where the new government has a chance to make a difference. Building the economy by encouraging business investment would jolt the job market in a way that encourages income growth through raises, bonuses and opportunities for promotions or moving to better jobs.

 
 

We’ll know the government had made progress on the economy when the level of concern about falling behind the cost of living drops well below current levels.
 
 

Affordability matters as a political issue. The Conservatives performed as well as they did in the recent election, especially in Ontario, because they acknowledged the financial pain people are feeling and talked about turning things around. If the Liberals can’t deliver on affordability, Canadians know who to turn to.
 
 

A few other signs of stress that came up in the latest survey by the non-profit Financial Resilience Institute:
 
 
  • 23 per cent of households said their financial situation had improved in the past year, down from 24 per cent last June
  • 55 per cent said they had drawn on savings to pay expenses, compared to 58 per cent in June
  • 53 per cent said housing affordability is a problem, down from 55 per cent in June
 
 
Callout: Has the trade war derailed your financial plan?
 
Get some free financial advice from The Globe and Mail by e-mailing finfacelift@gmail.com to be part of our Financial Facelift series. You don’t have to share your real name and our photographers will obscure your identity in one of our trademark Financial Facelift photos. Here are some recent facelifts for you to read. We’re especially keen to hear from Canadians worried about how the trade war with the U.S. will impact their ability to retire. Have you changed your investment strategy? Your retirement timeline? Your travel plans? Hopefully our advice can help you weather these stormy times and ensure a secure financial future.
 
 
Subscribe to Carrick on Money
 
Are you reading this newsletter on the web or did someone forward the e-mail version to you? If so, you can sign up for Carrick on Money here.
 
 

 
 
 
Canadians are big on investing in stocks
 
This infographic compares countries around the world by the extent to which their populations invest in the stock market. Canada is right up there.
 
How to play a buffet
 
There’s a technique for buffet restaurants, OK? Avoid the stuff at the front of the line – it’s designed to distract you from the better food down the line. My own buffet strategy is to do a first pass where you try things and avoid loading up on something you’ll regret after one bite. No buffet bats 1.000.
 
The apocalypse meal kit
 
Costco is popular with families willing to buy in bulk to save money, and also with people planning for the breakdown of society. In fact, U.S. Costco shelves have featured what has been described as “a Costco apocalypse dinner kit.” Dehydrated macaroni and cheese, plus other delicacies that will last up to 25 years.
 
When frugality doesn’t pay
 
A list of frugal habits that aren’t worth the trouble. Attention, Costco shoppers. Always buying bulk makes the list.
 
 
Podcast fans
 
Subscribe to Stress Test on Apple podcasts or Spotify.
 
 

 
 
 
 
Question
 
We are 65 retired and, with the tariff issues, we moved all registered accounts into high interest savings accounts. TFSA and RRSPs. Once markets finally settle, we are hoping to set up the funds for monthly withdrawals. Looking for solid predictable monthly returns, maybe exchange-traded funds or guaranteed investment certificates. Can you recommend?
 
Rob says
 
The fact that you moved your tax-free savings account and registered retirement savings plan into cash suggests you should think hard about going back into stocks or ETFs holding stocks. Stocks provide the best long-term gains, and they can produce attractive dividend yields. Also, many ETFs pay monthly distributions. But if the trade war scared you into moving to cash, it’s likely the future market upsets down the line could cause the same reaction. Cumulatively, moving out of stocks on bad news could negatively affect your retirement saving. Monthly pay GICs would let you avoid stock market volatility, but with much lower potential returns over the long term. Another thought is using a portion of your RRSP money to buy an annuity.
 
 

Do you have a question for me? Send it my way. Sorry I can’t answer every one personally. Questions and answers are edited for length and clarity.