Even though inflation is slowly easing, the cost of living is still rising and it’s impacting Canadians. In fact, 69% of Canadians have had to reduce their non-essential spending, according to Grant Thornton. And 32% have even had to cut back on essential items, like groceries and medication.
As affordability continues to be an issue for households, there are some steps you can take to ease financial strain. And it doesn’t include giving up your morning coffee.
The first step is to create a cash flow plan, which should include short-term goals, like saving for a vacation, and long-term goals, like your retirement lifestyle. Learn more about how behaviour-based cash flow planning can help you free up more cash flow to fund your goals.
Another idea to help you keep more money in your pocket is to give couponing a try. While the thought of going through grocery flyers to cut out coupons sounds tedious, times have changed. Apps like Flipp and reebee make it easy. These apps track hundreds of stores across Canada, so you can seamlessly find deals and even price match across stores.
Also, when you’re heading out to the shops, create a list of items that you need to buy — and stick to it. This will help you avoid impulse buys that will drive up your total at checkout. While you might spot a sale and think you could use that new cast iron pan, these last-minute buys can add up.
You can also buy items off season. As soon as Halloween is over, the price of costumes plummets. Consider planning next year’s costume ahead. The same goes for Christmas, Valentine’s Day, Canada Day and all the holidays throughout the year. Buy once the holiday is over, and see how much you can save. Also, consider buying clothing items once the season is over, instead of before it starts. The price of items like winter boots and jackets, or shorts and sandals drops once the season is over.
And don’t forget to evaluate all of your bills. Perhaps you had a higher data usage when you used to travel to work, and now you work from home and mostly use your wifi. You can downgrade your data usage on your cellphone bill and save money. Or perhaps you subscribed to magazines for new moms, but now have a school-aged child. Even though the cost may seem nominal each month, think about what it costs each year — it could amount to an extra hundred dollars that could be used elsewhere.
You can also take proactive steps to reduce your electricity and heating bills. How? Washing clothes in cold water and during off hours, like during the day on weekends, can save you money. Be sure to turn off lights when you leave a room. And keeping the thermostat at 22 degrees Celsius, instead of cranking it up to 25 degrees Celsius, will also save you money each month.
Another way to save is to reevaluate entertainment plans. Going to a broadway show will definitely take a chunk out of your paycheque. Instead, go to your local city’s website to see what’s being offered free in your area. Many cities offer free cultural activities, like museum visits, or outdoor family events, like a concert at the park.
Saving for the future
Once you’ve created that cash flow plan and gone through all of your expenses, you should have some extra cash each month. It might be tempting to use it all to splurge on fancy dinners and entertainment. And why not? Treat yourself, of course. But don’t spend it all. It’s also important to save that money for future goals and rainy days.
So put those smart savings in an emergency fund first. It’s recommended to have at least three to six months’ worth of expenses saved in an emergency fund, according to Manulife. Read our blog to learn more about how having an emergency fund can give you peace of mind.
Once you’ve topped that fund, then you can put any savings each month into other types of accounts. For instance, you can put that money towards your short-term vacation goals, perhaps in a High Interest Savings Account (HISA). Or you can put it towards your long-term retirement goals, like in an RRSP or a TFSA.
It might be daunting and sound like a lot of work. But by taking small steps each day to proactively think about your cash flow plan and spending, you will save money and be able to afford more in the long run. So think about your expenses. And when you have leftover money each month, put that extra cash into savings. Your future self will thank you.
CacheFlo is a financial education company that builds eLearning and tools to help financial professionals and individuals make behaviour-based changes, which allows them to get more life from their money. We want to make it easier for people to predict the impact of their financial choices before they make them.
About the Certified Cash Flow Specialist (CCS) program
CCS professionals go through enhanced cash flow-based training to develop the skill set to deliver behaviour-based cash flow advice. They start the financial planning process with a cash flow plan to genuinely help their clients get more life from their money.
About the Real Life Money program
An annual, digital, behaviour-based program that teaches employees everything they need to know and do to become financially capable. Our proven financial wellness program combines online workshops, microlearning, and a powerful app called Winton that puts financial capability, confidence and control into the hands of every employee. Learn more.