As I go through my day-to-day, schlepping in my rain boots through the slush and daydreaming about winning the lottery, the constant buzz about the Canadian economy snaps me out of my daydreaming. It made me think, “How concerned should I be with the economic downturn and what does this really mean for my personal budget?”
Please note, I am by no means a financial advisor and I have only began to educate myself on this topic, but would like to share some of my learning as it may help you save a penny or two. I don’t want to sound all doom and gloom, but the reality is that the volatility of our economy and the hit to our major money maker, oil, is something we should be concerned about. What I have realized is that our dollar’s decline is due to the plummeting price of crude oil on the market.
We are now in a state of oversupply of oil in the world, as many countries tried to capitalize on the high returns that fossil fuels once garnered. However, the demand for oil has been stagnant for a while now, which naturally brought the prices down. On top of that, Saudi Arabia –the biggest producer of oil in the world– refused to lower their production and in addition cut the prices for the US to maintain market share. This set Canada to face a decreasing demand and diminished purchasing power on the global market.
But what does all of this mean for you and me? I have heard people say that the dip in gas prices puts money back into your pocket, as we pay less for the fuel in our cars. That is only one side of the coin. Our American neighbours may be more positive since their dollar has recently strengthened, but unfortunately this is not the case for Canada. The devaluation of our currency is only good for some businesses and generally bad for individual consumers. It means that imports will be more expensive; if you were thinking of buying a US car or an Italian wine, it may cost you 20% more than it did a year ago. But if you work at a vineyard in Niagara on the Lake, you may see a spike in American tourists this summer.
My financial advisor has told me: “Make sure you know where your dollars are being spent, so you don’t get yourself in financial difficulty. If you are planning a big trip this year, I may revisit that idea and make sure the extra cost of the exchange rate still allows you to remain within your budget.”
On the bright side, travelling within Canada will eliminate the extra costs that would be introduced by the exchange rate and we cross our fingers that flights may dip due to the lower cost of oil. If you are yearning for a vacation this year, it may be a great time to check out some fabulous cities in our beautiful country.
Since we at Vv Magazine are always here to lend a helping hand, here are some Canadian destinations suggestions that are truly unique and worth every nickel — cause we got rid of the penny, eh?