7 Inflation-Busting Tips to Reduce Your Cost of Living

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Inflation in Canada is the highest it’s been in nearly 40 years and there’s no end in sight. As the cost of living continues to rise, it’s essential to find ways to manage your finances effectively. For Canadians who have the added burden of trying to tackle debt while already struggling to make ends meet, getting costs under control is an even greater priority.

The good news is that, by focusing on creating a balanced budget, you can successfully ride out rising costs and avoid a financial fallout. Here’s some inflation-busting tips to boost your budget and keep expenses in check.

Tip #1: Review your expenses

A balanced budget begins with knowing where your money is going. It’s easy to lose track of expenses if you don’t carefully monitor your spending, which is why it’s wise to review your bank account transactions from the last three to six months. This will give you a clear overview of your finances. Armed with accurate information, you can then determine what are necessary expenses and what are optional household expenses (i.e., wants versus needs) and start to cut down on unnecessary costs.

Tip #2: Prioritize saving

With costs expected to continue rising, it’s essential to be prepared to cover higher expenses. The best way to do this is to focus on growing your savings. If you don’t have extra savings set aside that you can draw on when the unexpected strikes, then it can be hard to keep your budget balanced. Protect yourself from unforeseen expenses by making it a priority to build up an emergency fund.

It’s easy to get started. Just find any extra money you can set aside – it’s incredible how even $10 or $20 a month will add up over time (especially if you keep the money in a high-interest savings account). Worried you’ll be tempted to spend rather than save? Reduce the temptation by signing up with your bank for pre-authorized transfers. You can arrange to have a set amount from each paycheque automatically transferred into a savings account.

Tip #3: Assess your spending habits

You’d be surprised how small day-to-day expenses can add up and strain finances just as much as occasional big purchases can. A little effort to save a bit of money here and there can multiply over time and really give your budget much needed breathing room. To lower expenses, identify optional expenses you can cut back on, like daily coffee runs, takeout, cable packages and entertainment.

Tip #4: Consider alternative transportation

Transportation can be a huge expense, especially given the price of gas. It’s worth looking into whether public transit would be more cost-effective now that gas prices have risen so high. If you factor in car maintenance and insurance, opting to use public transportation could save you hundreds if not thousands of dollars every year.

It’s also a good idea to consider carpooling for the school run or for your commute to work. Finally, ask yourself if there are trips you’re making via car that could be made by bike or by walking. Using your bike or your own two feet as a preferred method of transportation also has the added benefit of improving your health (and maybe you could then cut out your gym membership and save even more).

Tip #5: Reduce your grocery bill

For most Canadians, groceries are a major monthly expense. Anything you can do to save on the cost of food will return big dividends. Here are some suggestions:

• Make a grocery list and stick to it. Fewer trips to the grocery store means less opportunities for impulse purchases

• Use coupons and price match. There are now lots of grocery and shopping apps that help you find the best deals in your area

• Favour generic brands over much more costly name brands

• Local produce stands are often less expensive than a grocery store

• Start planning your meals for the week so you can be efficient about what ingredients you buy at the store. By carefully planning out your meals you can also ensure the ingredients could stretch to make more meals

• Reduce waste by using up any leftovers

Tip #6: Review your bills and subscriptions

Cancel any subscriptions or services you’re no longer using or can go without, such as apps, streaming and music.

Many people assume that the seemingly inevitable cost increase you see on your TV or phone bill can’t be avoided, but you can negotiate your bill with many service providers, especially if you threaten to go to a different provider. You can also often save a significant amount by bundling your services for telephone, cell phone, internet and cable with the same company.

Tip #7: Pay down debt

If rising costs are impacting your budget and you’re finding it difficult to keep up with debt repayments, now may be the right time to consider consolidating your debt. If you have multiple sources of debt, like high-interest credit card debt, overdue bills and retail store financing, there are many benefits to consolidating bills into one monthly personal loan payment. Not only does debt consolidation make your payment schedule easier to manage, you could also reduce interest charges and pay down debt faster.

Use Fairstone’s debt consolidation loan payment calculator to find out how much your monthly loan payments might be. Enter the total amount of debt you’re looking to consolidate, then toggle options to see how loan type (unsecured vs. secured), payment frequency and loan term can affect your loan payments.

The Bottom Line

When expenses rise, it can be tempting to use credit to keep up with bills. But relying on credit cards can quickly turn months into years and a mountain of debt. With interest rates and the cost of living going up, it’s important to take control of your monthly budget today. A balanced budget will help you manage increased expenses and provide financial stability to weather rising inflation costs.

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