Inflation, among other things, has increased our monthly living expenses and is affecting our monthly budget.
We aren’t the only people planning and trying to free up cash, and it’s not easy.
Giving up what you already had is hard, but it’s a realization that it is no longer affordable.
The Canadian inflation rate is at a 31-year high of 6.7% and crushing wallets and investment accounts.
With the price of gas over $2.00/ litre and food prices in Canada skyrocketing, Canadians have to make better choices about where their money goes.
Paying More And Getting Less
Although we increased our 2022 grocery budget to $650 for two adults and one child, we may revisit that number in a couple of months.
Food prices rose 7.4 percent in February from the same month a year earlier, the most significant jump in more than a decade. Beef increased a staggering 16.8 percent, the chicken was up 10.4 percent and dairy products and eggs rose nearly seven percent. – Source
Related: 8 Ways to save money buying meat
Whenever we drive by the mall, the parking lot is packed with lineups at McDonald’s, Starbucks and Tim Hortons.
There’s no fast and furious when you can’t afford to pay the bills at the end of the month.
Who are these people that have money to spend on a $7 latte from Starbucks that could be made at home?
Today, I want to talk about keeping living expenses low to survive a financial crisis.
- Basic Living Expenses For Homeowners and Renters
- Highest Monthly Budget Living Expenses For Canadians
- How to Earn Money Without Selling Your House
- Why Canadians Are Still Shopping On Credit
- Living Expenses To Free Up Cash
Investments vs. Living Expenses
I’ve been watching our investment portfolio take a nosedive just as it did in 2009, and that’s scary.
Although, we are optimistic that we will have time before retirement to recover investment losses.
Is that even possible? On paper, yes, but the missed prospects set the numbers back.
Trying to climb back up a hill means you’ve lost financial opportunity, but that’s the risk investors take.
For example, if you go to Bingo every day and spend $100 for one week, that’s $700.
If you don’t win back your money, you have now lost $700 and need to win it back or cut your losses.
However, if you did win, let’s say, a $1000 bingo jackpot, you are up to $300 in winnings.
Again, the following week you repeat the same process and win nothing; you’re down $1100.
Consider this; you have the control to stop going to bingo and save your money.
The same goes with investments; however, far more financial risk is involved.
Investment control sounds daring; however, some investors hit the nose on the jackpot.
Selling Your Home In A Seller’s Market
Essentially, investment time is on your side if you’re young and not so much if you’re near retirement.
That’s sad to think about and why many seniors are cashing out by selling their homes now.
Without retirement savings, their home is the biggest investment asset they have for many Canadians.
Canadian real estate has been in a seller’s market since January 2022 as prices have gone bonkers.
We’ve never dreamed our house would be worth over one million dollars in such a short time.
It’s laughable considering how much we paid for our home in 2009, $265,000.
Now is a fantastic time for seniors to sell their houses, provided they have somewhere to live.
Selling a home will free up cash for seniors or anyone with equity in their home, plus the buyer’s cushion.
Although tempting, we’re not interested in moving but intend to reduce living expenses.
Basic Living Expenses That You Need
Below is a snapshot of our monthly budget categories and the actual or estimated living expenses.
If you find that your budget cannot handle your current net income (how much money you bring home), it’s time to get rid of what you don’t need.
Everyone’s wants and needs will be different based on income; however, the collective is a realistic budget.
Whether you own a home or rent, there are basic living expenses that you need to track.
Basic living expenses fuel your day and keep the household running.
The current state of housing for renters or house hunters is a struggle because of affordability.
Let’s make a quick list of these living expenses to have a better look at them.
In no particular order, I’ve listed below categories that are basic needs for Canadians.
- Paying rent plus parking costs or mortgage payments
- Grocery Shopping for humans and pets
- Monthly bills, although renters may be all-inclusive where homeowners have to pay including property taxes, house insurance, and renter’s insurance.
- Hydro, Gas, Water
- Debt Repayment
- Transportation including petrol, insurance, bus pass, bike
- Clothing and Shoes are either thrift shopping or lower-cost clothing and shoe stores.
- Daycare Costs
- Home Maintenance
- Health Care Costs
- Projected Expenses
- Licence renewal fees for vehicles, work trucks, tradespeople or those who pay employee dues or fees.
- Gifts for Christmas, Birthdays and other holidays that you celebrate in your home can be put on hold or include homemade gifts for less.
General Monthly Living Expenses You Don’t Need
Unfortunately, if you’re struggling with your living expenses, there are ways to reduce costs.
Below is a list of categories Mrs. CBB and I would cut if our net income could not afford them.
If we find we aren’t reaching our financial goals, then there are two things we can do.
Stop spending, Save Money or Earn Extra Money.
Canadians lack enough time with their families that having two or three jobs is difficult.
Stress levels are high for everyone struggling or close to losing everything they own.
Choose your decisions wisely, and make no mistake that excuses will bite your ass in the end.
I’m true to finance and budgeting and am not an investing expert, but one thing is for sure, money is money.
Luxury Items are those that you can live without, whether long-term or short-term.
- Entertainment (find free ways to have fun at home or outdoors with family and friends)
- Sports, Gym and Exercise Classes (find ways to get fit for free)
- Transportation (not everyone needs a car full-time when they ride a bike, take the bus or walk to reduce living expenses)
- Allowance is not a need
- Investing can be put on hold
- Renovations can wait unless they must be done
- Telecommunications such as mobile phones, data plans, cable tv, cable subscriptions, home phone if you have a mobile phone, high-speed internet vs. a lower package or no internet free-wifi. Call your provider (ours is Rogers communications) to see if they will offer you a promotion if you’re adamant about keeping these services.
- Holiday Planning, unless it’s a free holiday or low-cost
- Donations to charities or reducing donations
- Cancel all subscriptions to magazines, apps, movies and music such as Spotify.
- If you have Amazon Prime and have already paid for it, only use it for necessary items that you’ve priced and have free shipping.
Household Clearout To Earn Cash Fast
We thought long and hard about living a minimalist lifestyle over the past couple of years.
For example, our son’s Linenspa Innerspring mattresses for his bunk beds are excellent.
Bedroom furniture for 3 rooms was purchased from a homeowner who built a massive cottage on the lake.
We did buy used solid wood bedroom sets in Kingsize and two Queens for under $400 each.
The mattresses we spent money on but still negotiated prices at Sleep Country Canada.
Today, we sell all of our fancy home decor, wall hangings, mirrors and solid wood tables from the Bombay company.
The Bombay company is no longer in business, but their products sell for good money.
We’ve concluded that they are dust collectors and no longer want them in our home.
Cleanout Your Closets
The same goes for items we no longer use but train our brains to think we will need in the future.
Coming to terms with clothing was the most significant opportunity for a household clearout.
Some clothing and shoes will be sold online, and donate the rest to local charities.
The next clearout will be kitchen items and a complete sweep of the garage as there’s too much stuff.
Reducing household living expenses also include not buying stuff you don’t need.
Besides, we don’t plan on leaving this world with a house full of stuff for our son to clear out.
Online Savings Opportunities
The more Canadians shop and fuel the economy with cash, the higher the prices.
When there is a demand for products, manufacturers will produce them at a higher cost.
Getting back to budget basics and finding ways to save money on needs, not wants, is crucial.
If you are an online shopper, I encourage you to sign up for Rakuten (read my Rakuten review here) and many other savings, surveys and cashback websites.
Living Expenses Vs. Reality
It becomes a slippery slope with too many Canadians not knowing how to handle money or caring to learn how to budget.
Canadians hope and believe that who they vote for will come through when election time comes.
Unfortunately, we can’t bet on the government by placing our hands in their pockets.
This is why it’s so important to be realistic with your living expenses.
There’s great value in knowing that you are financially safe from inflation and increased expenses.
Argue the toss all you want because that’s our right; keep your budget chill in the background.
Lastly, I know many of you might not want to give up some of the things you have, but often it’s necessary.
Budgeting is not a forever plan. It’s a plan, for now, to fuel the future so you can live debt-free or stress-free.
Having some debt is realistic but creating more when you can’t afford to do so is harmful.
Clear out your living expenses by reducing what you buy, selling what you don’t need and saving money budgeting and earning cashback.
Discussion: How has inflation ripped through your living expenses? What changes are you making to ensure that essential household bills are paid?
Please leave me your comments below on this topic.
Thanks for reading,
Other Articles To Read
- 10 Step Mini Budgeting Series
- How Canadians Are Saving Money Online Shopping
- Why You Shouldn’t Feel Guilty Saving Money
- Common Money Mistakes And How To Avoid Them
- How To Build A Financial Toolkit
- Ways To Stop Pretending You’re Financially Stable
- 5 Grocery Savings You Should Scoop Up
- Household Savings Hacks To Save Money
Subscribe To CBB And Get My Custom Emergency Binder
Get CBB By Email + My Free Emergency Binder Printables!
You’re Almost There!
I’m so excited to have you here but there’s one more easy step in the email verification process.
Final CBB Subscription Verification Step 2:
Go to your email inbox (check your Spam folder if you don’t see an email from me)
Please confirm your subscription to Canadian Budget Binder.
Once you read the email, scroll to the bottom, and click on the red box, “Yes, subscribe me to the Canadian Budget Binder List!”
That’s It, You’ve Done It, You’re In!
I can’t wait to see you on the other side friend.
Let us be part of your debt-freedom journey.
Subscribe To the Canadian Budget Binder And Get My Exclusive CBB Emergency Binder FREE!
The post How We Battle Inflation By Cutting Living Expenses appeared first on Canadian Budget Binder.