How to manage the cost of living in Canada

Canada Life - Mar 31, 2023
Many Canadians are feeling the effects of rising inflation in the form of more expensive groceries, higher interest rates and rising gas prices
a couple filling in a document

What is inflation? 

According to the International Monetary Fund (IMF), inflation is the rate of increase in prices over a given time period, usually a year. Inflation can be a broad measure, which looks at the overall price of living in a certain country for example, or it can be calculated to measure a specific cost, such as the cost of a loaf of bread, a haircut, or gas.

How does inflation impact the cost of living? 

As things become more expensive, people need to adjust their budgets to pay more for essentials like groceries. This can cause an issue if prices continue to rise, but wages don’t rise to keep up. 

If buying the essentials costs more but your paycheque stays the same, you may quickly find yourself among the many Canadians who are struggling to keep up with the cost of living. Research from the Angus Reid Institute shows that just over half of Canadians (53%) feel like they’re outpaced by the rising cost of living, especially by expenses like groceries, gas and energy bills. 

The Bank of Canada is taking steps to fight inflation, but there are some steps you can take in the meantime to help manage the rising cost of living. 

How to manage rising costs in your day-to-day life 

Re-examine your budget 

A great place to start is by seeing what expenses can be scaled back, and if there are any that can be cut out of your budget completely. 

You can review bank statements, check your banking app or online accounts more frequently, or perhaps keep a written record of everything you spend over a month. This might help to spot money spent on things like take-out, coffee, subscriptions to streaming services or other online services you may have forgotten about, or other small costs that can quickly add up.

Be sure to have honest conversations about spending with others in your household, and when going over your budget, make sure you prioritize important bills such as utility bills and mortgage payments. 

Pay down expensive debt 

When looking over your expenses, make sure to evaluate your debt repayments, too. If possible, you may want to put some of the money you’ve cut out of your daily budget towards paying off more debt or consolidate high-interest debts into one lower-interest payment. 

Plan your meals 

If your grocery bills are running higher than you’d like, look for ways to make your money – and your food – go further. You can use weekly flyers to find deals on groceries, and plan meals that will generate leftovers. You can also join a loyalty program to generate rewards and offers that could help you save money. Sticking with a list and resisting impulse purchases can help lower your bill, too. 

Consider making lifestyle changes 

Some changes to your everyday life can also have a helpful impact on your wallet. For example, you could consider walking or carpooling to lessen the amount you drive, as well as planning errands to achieve as much as possible in one trip instead of many. You could also cut back on things like alcohol and meat consumption and look for free workout videos or apps that can help you stay healthy mentally and physically while skipping the gym membership. 

Explore ways to earn more income 

Along with cutting back, you may look for ways to earn more money to help pay for necessities. Perhaps you’ve got a hobby you could turn into a side business. Maybe you could look to progress your career and find a higher paying job. You could even consider changing careers completely if you think it would help financially. 

Consider moving 

This may be a drastic step, but if you’re struggling with the cost of living in your current neighborhood, you could consider moving somewhere less expensive– particularly if you can work remotely. If you want to stay where you are, you might consider downsizing and taking on a less expensive property. 

Worried about an increased cost of living could affect your ability to meet your financial goals? I can help you review your budget and adjust to your financial plan, if needed. Contact me today.

 


 

Ask an advisor: Market volatility – Canada Life

Learn about market volatility, how it impacts your investments, and how you can manage it.

 


View video script

 

Description: This animated video introduces a character named Tim and his advisor with illustrated graphics to show how market volatility can impact your imvestments and how to manage it.

Text: Ask an advisor” appears. The camera zooms out as the text lands in an outlined square. “How does market volatility affect my investments?” fades in below. An illustration of a bar graph draws on the right side of the frame.

Tim: There seems to be lots of ups and downs in the markets these days. What’s that mean for my investments?

Description: Tim and his advisor stand on a bridge in front of a body of water and hold coffee cups. The illustration zooms in on Tim, then on the advisor.

Advisor: Some market volatility is the sign of a normal, healthy market.

Description: A graphic titled Historical Returns appears on screen and draws the S&P/TSX composite total return index between 2004 and 2008.

Advisor: I know big declines in the market can make you question your investment plan.

Description: The graph expands to a falling market around 2009, then an improvement in the market until 2014.

Advisor: But, history has shown that when the market does fall, it eventually comes back even stronger.

Description: The graph flips over a smaller graph titled Retirement. It shows growth between 1% and 3% over a period of time.

Advisor: And that can be good for your investments in the long run.

Description: Screen transitions to a shot of Tim talking.

Tim: Are there things I can do to prepare for volatility?

Description: Screen transitions to a shot of the advisor talking and showing Tim the screen of her phone.

Advisor: There are – some you’re already doing.

Description: The rectangles appear on screen one on top of the other with the text, Investment plan, Long-term goals and Investment risk.

Advisor: Like having an investment plan. Staying focused on your long-term goals. And understanding your tolerance for investment risk.

Description: Screen returns to Tim and the Advisor standing on the bridge.

Advisor: Let’s talk about other strategies to help you manage market volatility.

Text “Let’s talk. Contact me today.” appears onscreen with the Canada Life logo and legal line: “Canada Life and design are trademarks of The Canada Life Assurance Company. canadalife.com 1-888-252-1847.”

 

The information provided is based on current laws, regulations and other rules applicable to Canadian residents. It is accurate to the best of our knowledge as of the date of publication. Rules and their interpretation may change, affecting the accuracy of the information. The information provided is general in nature, and should not be relied upon as a substitute for advice in any specific situation. For specific situations, advice should be obtained from the appropriate legal, accounting, tax or other professional advisors.

Canada Life and design are trademarks of The Canada Life Assurance Company.