Q: My fiancé and I are getting married in the summer and we are worried for our future. He’s been out of school for a few years and has a good job. I recently finished school and am looking for work to start my career. We both have student loans to pay off and the payments are higher than we expected. We wanted a large wedding, but our parents gave us the choice of helping with the wedding or with a down payment on our first home. We chose the home, but now we’re not sure if we can ever afford to buy. Is there anything we can do to get ahead when life is so expensive? ~Kaleigh
The cost of living is higher than it has been for several decades and there’s unfortunately, no way to know for sure when that will change for the better. For the current cohort of young adults embarking on their futures means that many will face decisions they never anticipated having to make. While being flexible and creative will make it easier to find ways to achieve your goals, with living costs still high and inflation not yet taking a backseat to other financial challenges, it’s worth finding ways to beat inflation and make your money stretch as far as it can.
Here are realistic tips to get you started:
Calculate unit prices at the grocery store
Groceries have always taken a big bite out of our bank accounts, but now Canadians are faced with shrink-flation at the grocery store as well. When brands reduce the size of their products but keep prices the same, what at first may appear to be normal pricing, has in fact become more costly. Bite back against shrink-flation and regain control of your grocery budget by calculating the unit cost of the items you plan to buy, or check the shelf label carefully. Some stores already calculate unit prices for you by putting the cost per 100 grams in small print on the shelf price label.
Take aim at your biggest expenses
Think about the monthly expenses that cost you the most. From housing and debt payments to utilities, groceries, child care, and transportation, look for ways to reduce your biggest bills. If, in the case of housing, reducing your payment isn’t an option right now, look for ways to offset your rent or mortgage amount. Take in a roommate or rent out the garage temporarily. Do what you can to generate some income from your largest asset.
When it comes to debt payments, pick either the avalanche or snowball method and give it an honest go for at least six months. By then you’ll see some initial results and will be motivated to continue paying down your debt. With utilities, call each service provider to ask how they can help you save. Meal plan and shop for groceries strategically, and consider if family or friends can help save on child care costs — look to trade off or ask grandparents for help. When it comes to transportation, look at other ways to travel and/or save on the way you are currently travelling. This could mean carpooling, taking transit, or combining trips to save on fuel. If you must drive, watch how much your driving habits cost you, and then adjust accordingly.
Find alternate income sources
You might have heard that diversification is a smart investment strategy, but it applies to other aspects of our finances as well. Look for various ways to increase your income if further reducing your expenses is not possible. The benefit of having several income sources means that you not only have more money to cover your current costs, but you also have a job to fall back on if you are laid off or face a reduction to your other sources of income. There are countless ideas for side hustles that could work for you, however, consider your options realistically before you become your own boss.
Look for money anywhere you can
Finding ways to get the most out of our everyday spending is a wiser financial plan than banking on winning the lottery. Look for rebates, discounts, refunds, and savings wherever you can. Consider using cash back credit cards for routine purchases, however, be mindful of not spending extra only to earn cash back. The benefit of cash back is further diminished if you pay interest or fees on a revolving balance. Do your research to find the right credit card for you and calculate how best to reap the rewards.
If using a cash back credit card isn’t right for you, collect loyalty points at your favourite retailer and redeem them for products and services or discounts on what you already use. Organize your shopping around the stores that offer the best points system for your needs. If you prefer paying by debit, cash back is not typically an option. However, review your banking package to ensure that you are not paying more fees than necessary. By using multiple payment channels, it is often possible to reduce the number of transactions in your account that incur service charges.
If your employer offers an extended benefits program, familiarize yourself with it thoroughly. Submit any receipts you have that qualify for reimbursement and plan how best to utilize your benefits to avoid additional out of pocket expenses. For instance, if dental checkups and cleanings are covered every nine months, inform your dentist’s office and reschedule six-month checkups for your family to appointments every nine-months instead. If the more frequent checkups are necessary, create a category in your budget to pay for them
Earn as much interest as you can
High inflation typically leads to higher interest rates for savings and investment accounts, so reach out to your financial institution for advice about how you can earn more interest. Gain an appreciation for risk versus return and put even small balances to work. Contribute regularly to a savings or investment account, even if you’re paying off debt, and watch the magic of compound interest grow your money for you.
The bottom line on protecting your finances against inflation
What’s old is new again when it comes to personal finance. Before the 21st century, tracking expenses, creating a realistic budget to live by, paying down debt, and avoiding risky decisions with savings allowed previous generations to weather the toughest economic downturns Canada had ever faced. Stick with the tried and true as you look for ways to protect yourself against the high costs we face today. It will help you come out the other side of these economic challenges with skills that provide for long-term financial stability.
Peta Wales is President and CEO of the Credit Counselling Society, a non-profit organization. For more information about managing your money or debt, contact Peta by email, check nomoredebts.org or call 1-888-527-8999.