The Guardian (Charlottetown)

Unpreceden­ted times may call for extraordin­ary measures

The best tips to combat the rising cost of living

- SCOTT HANNAH Scott Hannah is president of the Credit Counsellin­g Society, a non-profit organizati­on. For more informatio­n about managing your money or debt, contact Scott by email , check nomoredebt­s.org or call 1-888-527-8999.

Question: We were already finding it a little hard to make ends meet because we had to catch up with our mortgage and loan payments when the COVID payment deferrals ended after the first year of the pandemic. There was a light at the end of the tunnel, though, and we didn’t feel too bad about getting ourselves sorted, that is until groceries started getting more expensive. Now with gas prices so high too, we have no idea how we’ll manage. Our son lives in a town about four hours away and we usually visit him in the spring for his birthday. We’ll have to see if we can afford that drive this year. Have you got any suggestion­s to help us manage better? — Crystal

Answer: These have been unpreceden­ted economic times for many families. We have two years of restrictio­ns and adjustment­s to evolving measures behind us. The first year, many Canadians worried about their jobs and finding income replacemen­ts. This was followed by many months of trying to catch up and keep up.

Just when the light at the end of the tunnel was becoming a little brighter, rising inflation started pushing the cost of essentials up. Starting in mid-2021, most of us noticed a rise in our grocery expenses. The last straw, however, for many carefully balanced household budgets was the cost of fuel going up to levels we’ve never seen before.

To manage such a dramatic rise in living costs, many Canadians will need to turn to cost-saving options they might have never thought about before.

Here are some ideas to help you manage better:

DETERMINE A STARTING POINT

If you’ve never tried budgeting your money, now would be a good time to start. You won’t be able to make meaningful or sustainabl­e changes if you don’t have a starting point from which to make your choices.

Use an interactiv­e calculator to make it easier to figure out where you’re at right now. As you enter your income and spending details into the spreadshee­t, it will keep track of where you stand. Don’t let not being techsavvy stop you; a pencil and paper work, too.

If you aren’t sure how much you’re spending in a certain budgeting category, start with your best guesstimat­e. Don’t leave a category blank if you know that it should be part of your budget. Then, keep track of your spending for a few weeks to see where your money is actually going. If you’ve kept your receipts, they could help fill in any gaps.

Housing, groceries, and transporta­tion tend to be the biggest budget categories for most people. Keeping them as reasonable as possible is always important. However, an equally important part of budgeting is to keep close tabs on all of your smaller expenses as well. In the long run, a balanced approach will make the biggest difference.

REIN IN YOUR BIGGEST BUDGET ITEMS

Once you’ve got your budget outlined, it will be quick to tell which categories take up most of your income. If you have essential medical expenses, they could be a significan­t expense, too. As you look at individual expenses within each of these categories, ask yourself what changes you could make to your lifestyle that would either rein in your expenses, or supplement the income you need in order to afford those expenses. Stop yourself from excluding any viable options; drastic times sometimes call for drastic measures, so allow yourself some flexibilit­y.

HOUSING

Along with your rent or mortgage payment, count all of the utility bills that allow you to run your household. We tend to become set in our ways with these bills, so put each one under the microscope. Ideas to get you started include:

• Scale back your Internet package. A slight decrease in speed is often hardly noticeable.

• Pause any utility services that you don’t really need right now.

• Decide if you need a storage locker or if you can sell or donate what you’re keeping. With the crisis in Ukraine, many local aid agencies will gladly accept your donations as they establish homes here for those fleeing the war. If you have items to sell, that will help generate funds to use elsewhere in your budget.

• Check with your insurance profession­al to review your policies. Make decisions if you’re overinsure­d and look for the best way to remedy the situation if you’re underinsur­ed.

• Go back to the basics with consuming less energy in your home — only run the dishwasher and washing machine when they’re full; hang laundry up to dry or toss a dry towel into the dryer with your wet clothes to shorten the drying time; turn the lights off when you leave a room; and keep the thermostat lower at night and when you’re not at home.

• Budgeting for property taxes, strata fees and home repairs/maintenanc­e is important if you own your own home, however repairs and maintenanc­e can be needed as well in certain rental situations.

If your housing expenses come to much more than about 40 per cent of your after-tax income, you may need to make some bigger adjustment­s. Moving, taking in a border or tenant and renting the garage, yard space or outbuildin­g to someone who needs it — as long as you’re permitted to do so — might be options to consider.

It can be worth checking with your mortgage lender to see if your payments can be decreased at all. While in the long-term this can be an expensive choice, in the short-term it could mean being able to afford staying in your home.

GROCERIES

With the rise in costs at the grocery store, it’s important to be mindful of how much it actually costs to buy enough groceries for each person in your home.

Not counting any special dietary considerat­ions and shopping in specialty stores, budget $275 to $300 a month per person for food you prepare at home.

Then keep in mind:

• Eating out or picking up takeout needs to be a separate category in your budget.

• Employ savvy shopping strategies to stretch your grocery money as far as possible, and be sure to have a bite to eat before heading into the store.

• Plan your meals around what you already have at home and what’s on sale.

• Shop in stores that offer price matching. Bring the flyer along or have the app ready as you get to the checkout.

• Utilize community food insecurity resources, like the food bank, or pick up a second job that comes with discounts on food or groceries.

• Cut out the cost of convenienc­e. Chop your own vegetables, do your own grocery shopping, and avoid buying pre-cooked and packaged food.

Just like with your budget, if you plan to make changes with your grocery shopping, be realistic with your intentions. You don’t want to buy food that just ends up in the compost bin because it took more time to prepare than you had budgeted for.

TRANSPORTA­TION

Whether you spend a lot of time each day commuting, or you go to work with your slippers on and only drive for pleasure, vehicle expenses can add up quickly. From the loan or lease payment to insurance, fuel, parking, maintenanc­e and repairs, this area of your budget might be at an all-time high right now.

Here are some alternativ­es to try:

• Park one vehicle if you are a two-car household. If you discover that you can go without the second car, make the switch more permanent.

• Drive only on days you really need to. The rest of the time, take public transit, carpool, walk or cycle if any of these are options for you.

• Join a car-sharing service if there’s one available in your area.

• Talk to your employer about continuing a work-fromhome or hybrid arrangemen­t to help cut commuting costs.

• If you have an expensive car payment to make each month, or your vehicle is a gas guzzler, consider trading it in for a more economical ride.

Giving up the convenienc­e of driving your own vehicle whenever you need to go somewhere comes with lifestyle choices and changes. Give yourself enough time to adjust and learn what works best for you.

STOP THE LEAKS IN YOUR BUDGET

Much like a dripping faucet that continuall­y sends small amounts of water down the drain, many households have leaks in their budget, too. As you become more conscious about your spending and expenses, watch for costs that don’t add up to tangible results.

For example:

• An occasional drink on the go might be a treat, but an extra-large latte or other drink of choice every day is likely costing your more than you realize.

• Haircuts and salon services add up. Go a little longer between appointmen­ts.

• Bottled water can cost as much — or more — than gas. Make your own with a reusable water bottle instead.

• Look for lower-cost alternativ­es to the activities you enjoy most. Use the library and pause your ereader subscripti­on. Try the rec centre or head outdoors instead of maintainin­g a pricey gym membership. Join a club, either in person or online, to learn from experts rather than paying for courses.

• Rather than buying snacks while you’re out, include the cost of the snacks you like best in your grocery budget. Buy full-sized packages and make your own snack packs.

The bottom line on managing rising living expenses The final category to keep a close eye on is your debt payments. If a significan­t portion of your income is dedicated to your credit obligation­s, get help sooner than later to regain control of your paycheques.

A non-profit credit counsellor in your area can provide you with informatio­n about your options. They can provide you with guidance around your budget and help you with strategies to implement changes that fit your lifestyle.

We never know what the future will hold — some of your temporary changes might become permanent choices as you gain confidence with new money skills.

 ?? 123RF ?? With the rise in costs at the grocery store, it’s important to be mindful of how much it actually costs to buy enough groceries for each person in your home.
123RF With the rise in costs at the grocery store, it’s important to be mindful of how much it actually costs to buy enough groceries for each person in your home.

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