Home Economics: Getting better gas mileage; Home prices predicted to fall

Home Economics newsletter: A gut-check for your investment portfolio, pay increases and the ‘lifestyle creep’ that can come with them and how to change your driving behaviour to save on gas

Pay increases and the ‘lifestyle creep’ that can come with themIt’s no secret that salary increases can cause shifts in lifestyle. We know pay bumps and increases in disposable income can lead to pricier purchases of non-essential items. There’s a term for this phenomenon: “lifestyle creep” – when discretionary spending increases with someone’s pay, causing earnings to remain stagnant. Cindy Marques, co-founder and CEO of MakeCents, a financial coaching company for millennials, said that even clients who earn higher pay could find themselves living paycheque-to-paycheque. Here’s how to break the cycle so you don’t stunt your financial growth.How to save on gas Canadian drivers are feeling the pinch at the pumps as gas prices hit levels never seen before. What - if anything - can be done to soften the financial blow of filling your tank? Here are 10 ideas from the Canadian Press on how to get better mileage and change your driving patterns to save on your next tank.Flurry of dividend hikes likely from Canada’s banks: Analyst Canadian bank shareholders are likely in for a treat in the upcoming bank earnings season, according to veteran analyst John Aiken. He said the big banks are poised for a dividend hike “bonanza” and share buybacks – both shareholder-friendly moves. Aiken singled out National Bank as being positioned to deliver the most generous payout increase.Current 1% interest rate is too low, says Bank of Canada official Toni Gravelle, deputy governor of the Bank of Canada, said borrowing rates need to return to the level of two to three per cent in short order. He said the current level of one per cent is “too stimulative” and reiterated previous bank messaging that it wouldn’t hesitate to be forceful to tamp down inflation. Another half-point rate hike is widely expected at the Bank of Canada’s next meeting on June 1.But could hiking too quickly cause a recession? That’s the question on the minds of top investment bankers at Bank of Montreal. Dan Barclay, the head of BMO’s capital markets division, said he’s concerned rising interest rates around the world will fail to ease inflation and could plunge the global economy into a deep recession. His rationale is that a major source of rising consumer prices is because of supply chain disruptions, not household demand.  

TIP JAR  

“Now that central banks are unwinding monetary support, growth stocks’ valuations have further to fall”