Dad and son packing groceries

If you’ve made your regular trips to the pumps or to the grocery store over the past several months, you’re probably feeling the pinch in your pocketbook as prices continue to rise.  Snagged supply chains, lingering impacts from the pandemic, the ongoing conflict in Ukraine – these and other factors are having a negative impact on the economy, and ultimately, your finances.

Overall, Canadians have been faced with inflation rates of 6 to 7% over the previous year – a rather dramatic spike that has not been experienced since the early 1980s. While governments and central banks try to enact policies and legislation to help curb inflation, what can you do to keep expenses in check and ensure you’re not over extending yourself? We have a few tips.

Reduce everyday expenses

One of the first things you can do is revisit your budget to see what discretionary expenses can be trimmed. Do you need subscriptions to every streaming service? Can you get by without a fancy coffee every day? Maybe limit the amount you spend on takeout and food delivery? Little cuts and trims here and there can add up quickly.

If you don’t have a budget in place, this is a good opportunity to start one. A BlueShore advisor can help you get started, or take a look at our Advice Hub for helpful tips on creating a budget – this article in particular is a good read: The Hows And Whys Of Creating A Basic Budget

Saving on groceries. Start with buying what’s in season. Not only is in-season produce fresher, it is also typically available at better prices than when out of season.

Another way you can save on your food bill begins with what you already have in your kitchen. Food waste is a common problem in North America and BC is not immune. According to the provincial government, British Columbians throw away 1 out of every 4 bags of groceries they purchase. If you’re throwing out 25% of what you buy, then making better use of the food you already have – or buying only what you need with greater frequency – can go a long way to reducing your overall food bill.

And of course, look for specials and coupons at your local grocer either in-store, though flyers, on their website, or via saver apps. Then plan your meals accordingly.

Saving at the pumps. With gas prices now hovering around $2.00 per liter, a lot of us are looking for gas-saving measures. Keeping your car well-maintained, making sure your tires are properly inflated, carpooling or taking transit where possible, or simply driving less or at non-peak times will help.

You can also turn to apps and websites like GasBuddy to help you locate the cheapest gas near you, letting you save a few cents per liter on trips to the pump. Or if you’re thinking longer term, you might be considering making the switch to an electric car. We produced an article on purchasing an electric vehicle last summer.

Saving elsewhere. For other products and services, look for bargains, promo codes, and other ways to save. One helpful tip: Instagram and other social media influencers often share promo codes for the products and brands they represent, or do a search for an online promo code before you purchase. Those can help you save a few dollars and can add up quickly.

Put off large expenses (if possible)

Saving on the small things can add up here and there, but the big things can be taken care of in one swoop. If you’ve had dreams of overseas travel, a kitchen renovation, or a new car, this might not be the most opportune time. If they’re not absolutely necessary, it might be best to hold back on major expenditures at this time – at least until you’ve saved enough to take inflation into consideration.

The cost of fuel and pent up desires to travel after two years of restrictions have driven travel expenses skyward.  If you’re price sensitive, you might want to look a little closer to home for any upcoming vacation time, put off bigger trips for later or plan your travels for low season. But if you have your heart set on a big trip, planning well in advance can lead to costs savings as travel and accommodation rates tend to increase the closer you are to your planned dates.

Of course, things do happen and large expenses sometimes have to be dealt with in a hurry. After all, if the refrigerator goes on the blink, you still need a place to store all those now expensive groceries. To keep ahead of any unplanned expenses, it is wise to have an emergency fund and a good a line of credit readily available. Talk to us about getting on track with those if you don’t already have them in place.

Curb or eliminate debt

A common inflation-fighting practice for governments and central banks is to raise interest rates and the cost of borrowing. That can have an impact on your pocketbook down the road, especially if you’re borrowing or relying heavily on credit. Do what you can to reduce your debt load and if at all possible, avoid adding more to your burden.

Having credit available, though, is still important. Take a look at your existing credit cards and look at the rewards, points, and benefits they offer. It might be worth making a switch to another card that offers programs and rewards more relevant to your needs. And make sure to take advantage of what you have available to you – you may be able to use those points towards for some cost-saving measures. Our associates can help you review your credit card and reward options.

Advisor meeting with clients

Stress test your mortgage

While rising interest rates can help fight inflation, they do put some concerns and burdens on the shoulders of mortgage-holders. It would be wise to “stress test” your mortgage.

Essentially, a mortgage stress test lets you know what your mortgage payments would be under increased rates. Working with your budget, you could then see how an increase would impact your finances, giving you a better idea of what you might need to adjust as rates go higher.

If you have a mortgage that matures within the next 12 to 36 months and is up for refinancing, it is best to stress test it now so you can plan for the future. Given current Bank of Canada trends, you’ll want to stress test your payment at various interest rates to see what future payments may look like – use 6% as a benchmark rate. You can use our helpful mortgage calculator to get a general idea of your payment under different rates. And make sure to speak to your mortgage specialist to get an idea of what rising interest rates might mean for you.

Protect what you have

If you’re looking longer term at what inflation might mean for you down the road, you’re not alone. Inflation coupled with market volatility has left some people feeling a bit more apprehensive about the future, especially if they are retired or close to retirement.

Be sure to review your investment portfolio and your investment strategies with an eye to these conflating scenarios. Overall, you don’t want to make any drastic moves, but you should talk to your financial advisor to review market-related investments and any type of rebalancing tactics that can keep your portfolio in a healthy position.

There may also be some other strategies they can suggest for more immediate action. For example, some GICs can be repriced, and you might want to look at flex terms, jump rates, or escalator deposits. Talk to your financial advisor for the best course of action for you.

West coast storm

Protecting Your Nest Egg in a Storm

Are you retired or close to retirement and concerned about your money? Watch our webinar, available on demand, featuring BlueShore’s Claudio Chisani and Woody Yang for tips and advice on protecting your nest egg in the current economic condition.

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We can help

Rising inflation is concerning but it isn’t cause for panic. Managing your money and making your dollars stretch further takes a bit of skill and ingenuity, and if you do it well, you can still go forward with pursuing your goals.

This is a good time to review your budget and your finances with a mind to the future. If you need help on that or on setting up a long term financial plan, our professional advisors can help. Contact us today to get going and get answers to your questions on all matters of money and finance.

BlueShore Financial, Financial Advisor, John Cindric

John Cindric

Financial Advisor

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The information contained in this article/video was written by BlueShore Financial or one of our expert financial writers and was obtained from sources believed to be reliable; however, we cannot guarantee that it is accurate or complete. It is provided as a general source of information and should not be considered personal financial advice.