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Personal Financial Debt

These tough times won’t last forever, but the skills you learn will last a lifetime

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Mar 10 2022 • 5 days ago • 4 minutes read • 8 Comments A woman runs errands at the Yao Hua supermarket in Toronto. A woman runs errands at the Yao Hua supermarket in Toronto. Photo by Peter J Thompson/National Post Files

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Unsurprisingly, many wonder how they’ll be able to afford groceries, fuel, and other basic housing necessities in the future, as countless Canadians struggled to make ends meet before the necessities started to cost more.

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The solution in situations where needs put a greater strain on household finances is to go back to the drawing board and rebuild your budget. This starts with keeping track of where your money is going, as many Canadians lost touch with what life actually costs. The convenience of electronic payments makes it easy to ignore a $2 or $3 cup of coffee every morning or the occasional lunch out. But to find out everything that contributes to the big shortfall in your budget, keep track of your expenses by writing them down in a spreadsheet or even a pocket notebook.

Once you know what your money is being spent on, it’s time to make some changes. Eating out, entertainment, travel, gifts and other fun things are all areas that can be reduced to free up money for the essentials. If your housing, food, and transportation costs rise, watch those expenses carefully. Some are more fixed than others, but freeing up extra cash will help balance your budget.

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Housing is often your biggest monthly expense. Credit advisers recommend that you limit all of your housing expenses to no more than about 35 percent of your net (after-tax) income. That number includes the mortgage/rent payment, property taxes, condominium costs, home insurance, heat, and other utilities to run your home.

If you do the calculation and find that your living expenses exceed this limit, consider how you can manage this amount. Downsizing or renting out a room can help, as can cutting other expenses. Also discuss with your mortgage lender the options for temporarily lowering your monthly payments.

Aim to limit transportation to no more than 15 to 20 percent of your income. If your budget is tight, even this amount may be too high. If you have a two-car household, check out the single-vehicle parking options to save on insurance, fuel, and car payments.

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If you are paying to park, consider how you can eliminate/reduce those costs. Public transit may be less convenient, but savings on commuting costs can have a huge impact on a struggling family’s budget. Carpooling with a colleague can also be another option.

With gas prices at or near record levels, you may be able to trade in your gas guzzler for something more economical. Filling your tank for $40 instead of $80 or $100 will go a long way in freeing up money for other necessities.

To help my customers manage their money, we budget for average monthly grocery costs, exclusive dining out, and all the other non-food items you can buy at the grocery store. On average, food should cost between $250 and $300 per person per month. Dietary restrictions and where you shop can make those costs higher. However, if you find that your grocery costs exceed that amount, it’s time to find out why. Possible causes may include:

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How often do you shop?: The more often you shop, the more likely you are to spend money. If you shop at a smaller, local store for convenience—rather than a larger supermarket chain—you know your prices. The larger stores are often able to deliver cheaper goods because they buy in larger quantities. Also, in some stores, you can match the price with the selling prices of other retailers, provided you bring the competitor’s flyer (on paper or via a smartphone app).

Shopping when there is still a lot to eat in the house: Rather than letting your taste buds dictate your budget, focus on shopping your cabinets and freezer before hitting the store. Make a meal plan around what you already have and buy only what you need. That alone could mean less travel a month for groceries.

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Control how much food you’re wasting. According to a study by Dalhousie University’s Agri-Food Analytics Lab, Canadians have thrown away nearly $550 million worth of food at home in the past six months.

If you find yourself throwing away those well-meaning fresh fruits and vegetables, stop buying them. Buy frozen instead. They are often cheaper and those without additives can be more nutritious than fresh or canned. (They are frozen when ripe and are not picked green to withstand shipping.) They can also be ready to eat in less time than it takes to make the extra trip (more gas) to the store to use them up. to get.

Housing, food and transportation are the top three essential living expenses we have. Medical needs can be a fourth. If you run out of money after budgeting these expenses, you have four choices: look for further discounts, find ways to increase your income, top up your budget, or do a combination of all three. These tough times won’t last forever, but the skills you learn will last a lifetime.

Sandra Fry is a Winnipeg-based credit counselor at Credit Counseling Society, a nonprofit organization that has helped Canadians manage debt for more than 25 years.

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