Managing finances in the midst of rising inflation costs

by | Dec 14, 2023 | Financial Tips | 0 comments

Lately you may be feeling the pressure of inflation more and more as it starts to make a bigger impact on everything from your Starbucks coffee, to mortgage rates. How can you stay ahead of inflation? In this blog we share some tips on budgeting from our friends at Manulife Financial

The key thing identified in this article is that we have more power than we may think over how we spend and save. 

Managing spending

One of the easiest ways to start managing your household finances is by setting up a budget. To get started, you could simply list your expenses and income. This helps you identify where your money is going, and where you may be able to cut back. Manulife has a helpful budget worksheet to get you started. 

Once you have your budget written out, you may realize you have a surplus to put towards savings. On the other hand, if you find your expenses exceed your income, you will need to consider increasing income, or reducing your spending. 

Wants vs. Needs

Increasing your income can be challenging, but there are ways to do so. These could include asking for a raise, looking for a different job, taking on a tenant, or looking at assets you could sell. You can also look at cutting back your expenses. This will take intentionality and commitment. You’ll need to assess honestly what you need versus what you want. Even with the “needs” on your list, Manulife suggests considering ways to cut costs such as buying no name brands, in bulk, or price matching where opportunities are available.

In many ways, the “wants” come down to prioritizing what is most important to you and your family right now. Does the kitchen renovation have to happen this year? Or could that investment be put into an emergency fund to help you be better prepared for the future?

Lifestyle review

While looking at the “wants” in your life, you can also look at the lifestyle choices you’re currently making. This may include subscriptions, mobile data plans, how often you’re eating out, and what type of entertainment you experience with movies, theatre, concerts, etc.

There may be a few things in your lifestyle you can identify doing without – or doing with less. Perhaps you can have less Starbucks, and more coffee from home, for example. Habits are hard to change, but when you choose your priorities it becomes easier to deny what you’ve been accustomed to, to support the financial goals you are working towards.

Managing borrowing

It’s important to work smarter, not harder, when paying off debts. Manulife suggests listing all your debts with their outstanding balances and interest rates. Once you have them listed out you’ll see which debts have higher or lower rates. From there, you could choose to consolidate higher-interest debt into a line of credit. According to Manulife, this can simplify your debt management and save you money in monthly interest charges. 

There are also all-in-one account options to bundle your mortgage, flexible line of credit, and savings account. Manulife says moving to this option could save you interest and allow you to pay off your mortgage earlier.

Saving where possible

Even investing a small amount regularly can help set you up for future success. Financial planners at ACN Financial Group can help advise you on how to best grow your money. Some tax-efficient accounts to look into could be a TFSA, RRSP or RESP. The more you’re able to save where you can, the more financial security and flexibility you’ll have down the line.

If you’re interested in building a strong financial future, contact us today! We would love to sit down with you and help you find helpful solutions for debt management and saving.

inflation costs, managing finances