Inflation is when prices for goods and services rise and purchasing power falls. When inflation goes up, people have to spend more money to buy the same things. The bottom line is that everything is more expensive, and your already stretched dollar feels like it’s getting thinner and thinner.
According to Statistics Canada, the current inflation rate is the highest it’s been since 1991. With the price of everything on the rise, it’s natural to feel overwhelmed and stressed about your finances. While you can’t stop inflation, you can take some steps to combat it.
The first step is to adjust your budget. If you don’t have a budget, you need to set one up right away! A budget is a plan for how you will spend your money, and now more than ever, you need a good plan.
If inflation has your bank account feeling lighter than normal, you don’t have time for spontaneous spending. When you don’t follow a budget you tend to overspend, and you may even start using your credit cards or line of credit to make up the difference. Before you know it, you’ll find yourself falling deeper in debt with interest piling up.
Once you develop a budget, here are 5things you can do to fight inflation:
1. Review your spending habits
Right now, you probably feel like there isn’t enough to go around, but there could be areas where you are spending that can be adjusted. Without a budget, it’s difficult to always know. Is there anything you are spending money on that you can cut out for a while? Are there areas you are overspending? It would probably be a safe bet to assume there is a lot more being spent on gas and groceries….which leads us to #2.
2. Look for ways to save
To save at the grocery store, start buying generic products instead of name brands, select your items based on meal planning, go to the store with a list, and buy in bulk but only if it makes sense for you and your family.
Save on gas by doing your errands all on one day, join a gas rewards program, stop using cruise control, or carpool.
3. Earn a little extra
The best way to offset increasing expenses is to earn more income. A good side hustle can go a long way. While your current situation may not allow for another job outside the home, there are jobs you can do online from the comfort of your home, while still in your PJs and sitting on your couch. Or, you may have a special talent that allows you to sell your creations for cash.
4. Decrease your expenses
It’s never fun to have to cut things out of your budget, but if it decreases your financial stress and gets you one step closer to financial freedom, isn’t it worth it?
- Do you still watch cable? Can you change to just one streaming service?
- Make your coffee at home instead of making a Tim Horton’s or Starbucks run each day. It can really add up.
- Advertisements might be annoying on the free music subscriptions, but can you tolerate them to cancel your premium plan?
- Stop eating out or share an entrée instead of ordering two.
Reducing spending on items such as these may seem like it might not make a difference, but all combined and over the timespan of a year, you can really save hundreds of dollars.
It might not seem fun to reduce spending on some of your favourite purchases, but it isn’t forever. Right now, it’s important to make some changes so that you don’t fall into debt and can maintain your current lifestyle during inflation.
5. Bargain Shop
Prices may be going up everywhere, but you can usually find better prices if you take the time to do a little research. For example, before making online purchases, check out several websites before placing your order. When food shopping, compare prices online before heading to the store. Also, check for stores that offer gas rewards. Stores that offer this perk may be your biggest cost saver. Shop at the grocery stores closer to your home to save on travel. Lastly, download the Gas Buddy app to search for the lowest price near you at the pumps.
Inflation is tough on all of us, but with the right tools, you will make it through this. Not sure where to start? Check out our 8 Week Budget Plan or contact SolveYourDebts.com for a free budgeting session.