Inflation has always been a problem, but it has become a particular headache for Canadians in recent months, stretching many budgets to breaking point. The purchasing power of every dollar has dropped by levels not seen for decades, and to make matters worse, wages have not kept pace with inflation.
Here we’ll explore different aspects of inflation in Canada and the practical steps you can take to ease the strain on your finances as these difficult times continue.
One way you can be more conscious of your spending habits is to challenge yourself to a spending freeze. Find out how you can save money by cutting out impulse buying.
What causes inflation?
Inflation is a process in which the price of goods and services rises over time, lowering the purchasing power of each dollar or other unit of currency. The inflation rate tracks these changes in a representative sample of goods.
Inflation has several different causes. These include fluctuating levels of demand for particular goods or services, supply problems, economic disruption, and even an oversupply of currency.
Some goods and services are more prone to fluctuation than others. The most common flashpoints are:
- Energy (electricity, gas)
Dealing with inflation
With prices rising across Canada, inflation has become a significant strain on most people’s finances. It’s easy to feel like a victim of forces beyond your control. But there are practical steps you can take to ease the financial burden of this record inflation.
Audit your spending
Begin by assessing your spending patterns. Look at your spending over the first half of 2021 and compare that with your expenditure over 2022 to date. This comparison will give a good sense of how much inflation has impacted your life and decreased your spending power.
Reduce your expenses
Next, take a long look at your regular, monthly bills to assess where you can reduce them. Divide them into:
- Non-negotiable essentials such as rent or mortgage payments, food, heating, fuel.
- Things you don’t really need and could live without.
- Expenses you might be able to get a better price on if you shop around.
Shopping around and doing your homework could mean big savings on:
- Subscriptions: In a world of must-see streamed shows, it’s all too easy to pay for several online subscriptions. How many of these do you really need?
- Cell phone service plans: Do you really need all that data in a world of Wi-Fi? Could a prepaid plan save you money? You may be surprised.
- Home insurance: Many insurance firms will reduce your premiums and improve your coverage if you threaten to take your business elsewhere.
- Car insurance: The same principle applies to car insurance. If you’re signed up for auto-renewal, you may find your premium increases year on year without you noticing. Proactively negotiate with your supplier and see how you can save.
- Home internet: Many internet service providers rely on customer apathy to keep prices high. Phone and press for a better deal.
With our busy lives, it’s very common to let the above expenses continue for months or even years without shopping around for lower prices.
Be a conscious shopper
Food is an everyday essential but there is a surprising amount of scope for saving money in the supermarket aisle. Plan your weekly meals in advance and only buy what you need for these – this saves money and avoids unnecessary food waste. Basing those meals around the same ingredients also makes it much more likely you will use the groceries you buy each week, further reducing food waste and the amount you need to spend.
Make full use of coupons and cashback opportunities as they present themselves. Small amounts here and there add up over time, becoming savings worth achieving.
When buying larger items, prioritise secondhand options on eBay, Facebook Marketplace, and similar resale websites. It’s quite possible to save a lot of money while obtaining products that are almost as good as new. But do make sure any items you buy are in genuinely good condition.
Claim your due
Recently, Finance Minister Chrystia Freeland announced the federal government’s “Affordability Plan” totalling $8.9 billion to support Canadians during this financial crisis, in 2022. With this in mind, find out if there is any government assistance available to which you may be entitled to take some of the strain off your finances.
How a Licensed Insolvency Trustee can help you
If inflation is having a detrimental effect on your finances, why not seek out the support of a Licensed Insolvency Trustee (LIT)? LITs are federally regulated financial professionals who are qualified to provide everything from general advice to practical financial assistance with your creditors. If you’re looking for advice with money management, LITs are also licensed credit counsellors who can offer credit counselling services to help you get your finances back on track.
Reach out for financial support today
At Allan Marshall & Associates, our supportive and professional Licensed Insolvency Trustees have decades of experience to help you manage your debt. They will assess your financial situation and together you can work towards the fresh start that you deserve. Contact us today and start your journey towards a brighter financial future.