Tips for handling inflation to keep a balanced budget

2022-08-30   minute read

John Athanasiou

Debt Solutions

Inflation is the measure of the rising price of certain goods and services. Statistics Canada measures it from month to month, based on a basket of goods that represents what a typical consumer would normally purchase. The inflationary rate will be influenced by the type of goods in the basket but, generally speaking, almost all of us are seeing an increase in the cost of everyday basic goods that we consume on a regular basis.

couple budgeting together

The rising cost of goods and services is putting a strain on everyone’s pocketbooks. Unfortunately, there aren’t a lot of options for the average consumer. The only solutions are to either earn more money or buy fewer goods. Despite the increased pressure on employers to pay people more, wages don’t seem to be keeping up with inflation.

So now what?

Households being impacted by inflation need to find a way to spend less. In order to control your costs, you need to understand them. Let’s start with a budget. Sit down with your partner and take a look at your monthly cash inflows and outflows.

Some of us are used to old-fashioned pen and paper while others can use a simple spreadsheet on their tablet or laptop. Either way, it helps to have the numbers in front of you.

List those items on a line-by-line basis, with your cash outflows on one side and cash inflows on the other. Group your inflows and outflows into categories, then tally everything up and see what you find. Do your inflows exceed, or at least match, your outflows? If not, here are a few places to start to help you get balanced.

  1. Determine which household costs are discretionary and non-discretionary. Non-discretionary costs are items that you can’t live without (e.g. food, shelter, utilities). Those are usually tougher to control. Discretionary costs are items where you have some flexibility, such as dining out, shopping or entertainment. Begin by attacking the discretionary items and see what you can trim. Sometimes it’s obvious where you can scale back, but not always — and it can take a lot of willpower in either case.
  2. Shop around. Keep your suppliers on their feet, comparison shop, and don’t be afraid to ask your friends and family for details about their suppliers.
  3. Think short-term. Sometimes you just need to make a short-term sacrifice in order to make room for that monthly loan payment. You can add back anything you gave up once the loan is repaid — or you may realize you never really missed it all that much.
  4. Prioritize. Always be aware of the must-haves versus the nice-to-haves. Push the nice-to-haves until the end of the month and make the spend if you have room.

You don’t have to do it alone

Have you given it your best and are still struggling to cover your monthly expenses and debt payments? This is the time to see a professional. Schedule a Free Confidential Consultation with MNP today. One of our Licensed Insolvency Trustees will be happy to review your financial situation and discuss options to get the permanent debt relief you deserve.

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