A recent survey revealed that 44% of Canadians believe their financial situation will worsen in 2025, underscoring the lasting impact of record-high inflation and rising consumer debt. This perception persists even as the Bank of Canada has successfully lowered inflation to 1.8%, returning it to a healthy range after reaching a 40-year high of 8.1% in 2022.
Glenn Gaudet, a veteran financial consultant based in Brantford, says the drop in inflation doesn’t mean relief for most households. “While inflation might be under control now, we’re still dealing with the effects of the past,” he explained. “If something cost $100 two years ago, at 8% inflation, it went to $108. Now, at 1.8%, it’s risen again to $110. It’s not a large jump year-to-year, but compared to pre-2022 prices, it’s still $10 more. That’s significant for families already stretched thin.”
The compounding nature of inflation has left many Canadians struggling to catch up, particularly those in lower-income brackets. Gaudet noted that fixed expenses, such as food, fuel, and housing, have seen sharp increases, leaving little room for discretionary spending. “For families on tight budgets, there’s simply no way to absorb these costs without making sacrifices,” he said.
Adding to the financial strain is the growing burden of consumer debt. In recent years, many Canadians have turned to credit cards, personal loans, or financing options to manage rising costs. Gaudet believes this reliance on debt, coupled with rising interest rates, is creating a precarious situation for many households.
“One of the biggest issues is how people approach large purchases,” Gaudet said. “Instead of asking what something costs, they ask what the monthly payment will be. That mindset leads to decisions that prioritize affordability in the short term but create long-term financial challenges.” He cited examples such as financing vehicles or boats, where consumers focus on manageable payments without accounting for the interest and total cost.
For Brantford and other parts of Ontario, economic challenges are magnified by the region’s reliance on the automotive sector. With ongoing trade tensions between Canada and the United States, and delays in the development of battery plants promised to bring thousands of jobs to Ontario, there is uncertainty for workers in the region.
“The automotive industry is a cornerstone of Ontario’s economy,” Gaudet said. “If tariffs or trade barriers impact this sector, the ripple effect will be felt throughout communities like Brantford. Job losses or reduced hours are a real possibility.”
Gaudet also highlighted the disproportionate impact on lower-income households and hourly wage workers. “Unfortunately, the most vulnerable populations are often hit the hardest,” he said. “They don’t have assets to fall back on, and their expenses tend to rise faster than their wages. For them, inflation isn’t just an inconvenience—it’s a crisis.”
The financial landscape in Canada is also revealing a growing divide between those who have assets and those who do not. Gaudet explained that inflation has benefited higher-income households and wealthier individuals who own assets such as property or investments.
“Inflation means the value of assets rises,” he said. “For people who own homes or other investments, the increase in their net worth can offset higher living costs. But for those who don’t have assets, inflation simply makes everything more expensive without offering any kind of cushion.”
This disparity has widened the gap between the “haves” and “have-nots,” with the middle class continuing to erode. “What we’re seeing is a hollowing out of the middle class,” Gaudet said. “The divide between those who are financially secure and those who are struggling has never been wider.”
As Canadians navigate this challenging financial environment, Gaudet emphasizes the importance of rebuilding financial resilience. He offers practical advice for households trying to stabilize their finances, starting with a clear understanding of their expenses.
“Step one is figuring out where your money is going,” he said. “It’s not enough to have a vague idea—you need to go through your bank statements and credit card bills line by line. Break it down into needs and wants. A lot of what people think are needs are actually wants.”
Gaudet encourages individuals and families to create two columns—one for essential expenses and one for discretionary spending—and reassess their priorities. “This process can be uncomfortable, but it’s necessary. If you’re living paycheck to paycheck, you need to identify areas where you can cut back, even temporarily.”
He also advises tackling high-interest debt, such as credit cards, as a priority. “Carrying a balance on a credit card with an interest rate of 20% or higher is a huge financial drag,” he said. “If possible, consider consolidating debt into a lower-interest mortgage or personal loan. But that only works if you change your habits—otherwise, you risk building up debt all over again.”
Gaudet believes Canadians need to rethink their relationship with debt. “A lot of people make financial decisions based on what they can afford monthly, rather than the total cost of what they’re buying,” he said. “It’s a dangerous mindset. Whether it’s a car, a boat, or even a house, you need to look at the total cost—not just what the monthly payment will be.”
High levels of consumer debt, combined with rising interest rates, have left many Canadians vulnerable. According to Gaudet, managing debt effectively requires discipline and a long-term perspective. “The goal isn’t just to pay off debt but to change the way you approach spending,” he said.
While the Bank of Canada’s efforts to curb inflation have provided some relief, the economic challenges facing Canadians are far from over. For many, stagnant wages, rising costs, and growing debt continue to create significant financial strain.
Gaudet acknowledges that rebuilding financial stability will take time and effort. “It’s not an easy fix,” he said. “It requires tough decisions and a willingness to make sacrifices. But with the right mindset and careful planning, it’s possible to regain control of your finances.”
As Canadians prepare for another uncertain year, experts like Gaudet stress the importance of taking proactive steps to manage expenses, reduce debt, and build savings. In regions like Brantford, where economic uncertainty looms, financial resilience may be the key to weathering the storm.
