How to save money during inflation

Inflation is an important source of financial stress on Canadian households. Simply put, the rising cost of goods and services means that the money you have is no longer what it used to be.

In March 2024, The inflation rate in Canada was 2.90%., down from a high of 4% in August 2023, but higher than a low of 2.78% in February 2024. This comparison makes it seem like prices might be falling, but they’re not. It is not increasing as quickly as it was at the peak of inflation.

Continuous increases in the cost of goods make it more difficult to cover basic expenses and mean that the money you have set aside in savings accounts has less purchasing power. Not to mention, inflation on big-ticket items, like vehicles or homes, can have a disproportionate impact on low-income families, making it more difficult to meet basic needs like shelter or transportation to work.

This can leave less money in the budget to buy basic necessities like groceries. Learning how to reduce your expenses is key to saving money and avoiding debt amid rising inflation rates.

Start by preparing a budget

The first thing you should do when you want to manage expenses during inflation is to prepare a detailed budget that tracks all your income and expenses. This way, you’ll know how much money you have to work with and where you can make cuts in your spending.

“Make an affordable and achievable budget and only buy essentials. Ask yourself if this is a need or a want!”

Jan Riedl, credit counselor

Reduce major household expenses

Housing and transportation costs are major household expense categories. Finding ways to reduce these costs can be invaluable in dealing with inflation.

Making larger changes to higher-priced items can have a more noticeable impact on your finances than many small changes.

Reducing transportation costs

Reducing transportation costs can have a big impact on your budget. Some things you can do to reduce moving costs include:

• Take advantage of fuel savings programs at your local gas station.
• Limit your driving as much as possible to reduce fuel consumption as well as vehicle wear and tear. Some ways to do this include:
  • Use public transportation when possible.
  • Walk to nearby destinations (which provides good exercise for your health, too).
  • Using a bicycle for medium distances.
  • Car sharing with others.
• Review your vehicle insurance policy and ask the provider if they can offer discounts (or find an alternative provider with lower rates).

Ways to save money on rent/mortgage payments

Some strategies for Reducing housing costs Includes:

• Downsizing the house. Moving to a smaller house or apartment can help reduce housing costs.
• Find a roommate to split housing costs with. Instead of moving, consider inviting someone you know to live with you and split your housing and utility costs.
• Move to a new area. Consider moving to an area where housing is less expensive. However, be sure to consider the impact of commuting on your budget.

A quick overview of ways to save housing and transportation costs:

Smart shopping for big ticket items

Do you need to make a “big-ticket” purchase for your home, such as a new appliance or even a new car? Consider practicing some frugal spending tips:

• Plan ahead and time your purchases. Is there a big discount event coming soon? Is there a related holiday where the retailer might look to get rid of excess inventory next? Check the Public holidays calendar And look for times when retailers might offer better offers.
• Buy used instead of new. Many companies offer used and refurbished products at a significant discount compared to new versions of the same thing.
• Check local yard sales or online markets. With a little searching and shopping around, you may be able to find something you need that someone else is looking to get rid of for cheap.
• Think about off-brand items. Branded items are well known, but you may pay more for the logo on the item than for the actual quality of the product. Consider trying off-brand versions of items.
• Assess needs versus wants. Are you Need New refrigerator, or is the one you currently have working fine? Take time to carefully evaluate your needs versus your wants before making a major purchase.

Health care cost management

In Canada, health insurance plans provide health care at the 13 provincial and territorial levels Reasonable access to medically necessary hospital and physician services Without having to pay out of pocket. However, these health plans don’t cover everything.

To help you manage your healthcare costs, you may want to consider using… Additional health insurance. If your employer’s health insurance doesn’t already provide coverage for additional health care items you may need such as massage therapy, physical therapy, or travel health services coverage, taking out an additional policy can help you control your health expenses.

When shopping for health insurance, check the policy closely to see if it overlaps with your employer’s health insurance company to avoid purchasing excess coverage. Your financial institution or employer group health plan provider may be able to recommend personal health insurance plans to you to help you find the best coverage.

Education cost management

Higher education can provide a path to higher earnings, but it can also Leading to significant student loan debt. In the academic year 2023/2024 the average tuition fee is It is estimated at approximately $7,076– Up from $6,872 in the 2022/2023 school year.

This means that the average college or university student who started in the 2020/2021 academic year will face about $27,188 in debt if they graduate in 2024 – meaning Just For tuition fees. This does not include other costs such as textbooks, food, housing, school supplies, parking fees, etc.

In addition, some specific degree programs or schools will have tuition costs that are much higher than the average mentioned in the example.

When pursuing a post-secondary program, make sure that Evaluate your student loan and aid optionslike:

Scholarship programs that you don’t have to repay can help you reduce your total student loan debt by reducing the amount you owe.

Another way to control student loan debt is to attend a smaller community college or skilled trades program whose tuition is lower than big-name universities.

Student loan debt consolidation After leaving college is another potential option, but this results in losing out on tax deductions and could result in paying higher interest rates on a government loan.

Changing telecommunications and Internet service providers

Did you know that renegotiating TV, phone, and Internet service contracts or switching to new providers can save you hundreds of dollars annually?

For example, Government of Canada He notes that changing your ISP could save you $300 per year. Meanwhile, changing TV providers can save $360 per year, and changing cellular providers can save $240 per year.

However, only 1 in 4 Canadians surveyed by the government have renegotiated their contracts or changed providers. Taking the time to shop around (and informing yourself about your current telecom provider) can help you get a better deal and save money than most other Canadians.

Grocery shopping and meal planning

Grocery shopping can have a big impact on your monthly budget, especially considering the sharp increase in your monthly budget Food cost. Finding ways to manage your food costs can save you money. Some strategies include:

• Plan your meals. Create a meal plan for the upcoming week and use it as the basis for your shopping list. Not only will you save money by avoiding unnecessary purchases, but you can also avoid last-minute unhealthy food choices!
• Leave your kids at home or order groceries for pickup. If you are a parent, it may be helpful to use store/curbside pickup services where you can order online and load your groceries into your car when you arrive. This way, kids won’t have the opportunity to ask for things you don’t need and you can avoid adding their impulsive purchases to yours.
• Use coupons. Coupons from paper flyers, in-store displays, or smartphone apps can help you save some money at the checkout line. When creating your meal plan, consider planning for any coupons you have so you can maximize your savings.
• Take advantage of cashback apps and add-ons. Cashback apps like Exodus 51 It can help you save a little extra after leaving the store. Meanwhile, browser extensions such as honey It can help you find better deals on the items you need to buy.
• General purchase. If there’s a “store brand” or “non-brand” version of a product you frequently buy that’s the same as the name-brand version but at a lower cost, consider switching. These items are manufactured using similar ingredients, techniques, and quality, but are sold at a lower price than the name-brand products. Avoiding brand names on common food items can help you save a lot of money over time.
• Eat before you shop. Never shop on an empty stomach. When you feel hungry, you are more likely to give in to the urge to buy snacks or other items, which increases your spending.
• Buy in bulk. Are there multiple sets of things you buy frequently? If so, consider purchasing these items in bulk. It’s a higher initial cost but can save you money in the long run.

Following these simple tips can help you combat the effects of inflation on grocery prices.