Join Fund Library now and get free access to personalized features to help you manage your investments.

Pape’s 7 personal finance basics for 2023

Published on 01-23-2023

Share This Article

How to gain control of your financial life


We finally waved goodbye to 2022, and it didn’t come too soon. It was a year to forget: war in Ukraine; the worst inflation in 40 years; a messy stock market; bonds collapsing; the lingering impact of Covid; and on and on. Not a year anyone will shed a tear for.

Perhaps 2023 will be better, but there’s no guarantee. Economists are divided on whether a recession is looming, interest rates are almost certain to continue to rise in the short term, and the threat of a broader war still overhangs Europe.

With all this in mind, let me suggest some financial resolutions you might want to add to your New Year’s list.

1. Pay down debt

It’s a good idea at any time, but even more so since the long era of low interest rates has come to an end. Variable-rate mortgage holders and those with home equity loans can testify to that. They’ve been watching rates rise all year, in some cases increasing monthly interest payments by hundreds of dollars. If you can find some extra money, perhaps from a tax refund, direct it towards reducing your highest interest debt. Debt and inflation combined are a match made in Hell. The less debt you’re carrying, the less the pain.

2. Don’t buy on credit

The best way to avoid high interest rates is not to buy on credit in the first place. That’s easier said than done for most people. Few of us can pay cash for a house or even a car. In those cases, negotiate the best rate you can. But beyond that, try to avoid taking on more debt. That trip to Florida can wait a year if the alternative is to put it on your credit card. So can that glitzy new TV. The less debt you have, the more cash stays in your pocket.

3. Make a budget

It’s Home Economics 101, but most people don’t know how to make a budget and stick to it. And, until now, many have seen it as a useless exercise. But with costs escalating everywhere, from the gas pump to the supermarket, you need to get a handle on your spending. Failing to do so may push you to spend too much on frills, jacking up credit card bills. There are many free budget spreadsheets on-line. I got hundreds of hits when I did a search.

4. Take advantage of high short-term rates

With interest rates rising, many GIC investors believe rates will continue to increase in 2023. Don’t be so sure. The central banks may be close to pausing this rate hike cycle. If that happens soon, the market will stabilize, and GIC rates will likely pull back. We have a steeply inverted yield curve right now, meaning that yields on short-term government bonds are higher than longer-term bonds. Several smaller financial institutions are offering one-year GICs in the 5% range – about the same as they’re paying for five-year certificates. If you want to take advantage of this unusual situation to tuck away some cash until the stock and bond markets settle down, act soon.

5. Prepare for a rainy day

If a recession does hit, there are going to be layoffs – sometimes in companies that seem rock solid. What will you do if you or someone in the family loses a job? Ideally, you’ll have a reserve fund in place to tide you over. If not, it would be a good idea to start one. I know, after settling the bills and paying down debt, there’s little or nothing left. So, weigh your priorities and decide what’s really important.

6. Maximize tax-efficient savings plans

Canada offers several ways to save for the future in a tax-effective way. There are RRSPs and TFSAs, of course. Plus, your employer may offer a pension plan that you can join. If it’s available, make it your number-one option, as in most cases the company will match your personal contribution. The result is $2 in the fund for every $1 you invest. Plus, your own contribution is tax deductible.

7. Be on your guard

Almost every day, we see or read stories about people being defrauded out of hundreds, even thousands of dollars. Often, it’s the elderly, but everyone is vulnerable. The scammers come at you from every direction – phone calls, emails, fake advertising – you name it, they’ve tried it. The advice is familiar, but many people fail to listen.

Don’t click on any links from people you don’t recognize, and even be cautious with those from seem to be from friends. Don’t give out personal information over the phone. Don’t respond to emails from acquaintances asking for “a favour.” Don’t send money to pay “tax” on a trip you’ve supposedly won. You’ve heard it all before. Apply it.

With that, my best wishes for what I hope will be a happy and prosperous 2023.

Gordon Pape is one of Canada’s best-known personal finance commentators and investment experts. He is the publisher of The Internet Wealth Builder and The Income Investor newsletters, which are available through the Building Wealth website. To take advantage of a 50% saving on a trial subscription and receive the special report “The Tumultuous Twenties,” go to

Follow Gordon Pape on Twitter at and on Facebook at

Notes and Disclaimer

Content © 2023 by Gordon Pape Enterprises. All rights reserved. Reprinted with permission. The foregoing is for general information purposes only and is the opinion of the writer. Securities mentioned carry risk of loss, and no guarantee of performance is made or implied. This information is not intended to provide specific personalized advice including, without limitation, investment, financial, legal, accounting, or tax advice. Always seek advice from your own financial advisor before making investment decisions.

Join Fund Library now and get free access to personalized features to help you manage your investments.