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The Great-West Life Assurance Company, London Life Insurance Company and The Canada Life Assurance Company have become one company – The Canada Life Assurance Company. Discover the new Canada Life

The Great-West Life Assurance Company, London Life Insurance Company and The Canada Life Assurance Company have become one company – The Canada Life Assurance Company. Discover the new Canada Life

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How to manage the cost of living in Canada

Key takeaways

  • In June 2022, Canada’s rate of consumer inflation reached 8.1% - the largest yearly change since 1983.
  • Many Canadians are feeling the effects of rising inflation in the form of more expensive groceries, higher interest rate and rising gas prices.
  • While the Bank of Canada (BoC) takes steps to curb the cost of living, you can make changes to the way you shop, spend, and save to help stay on track financially.

What is inflation?

According to the International Monetary Fund (IMF)Opens a new website in a new window 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.

“Whatever the context, inflation represents how much more expensive the relevant set of goods and/or services has become over a certain period. Consumers’ cost of living depends on the prices of many goods and services and the share of each in the household budget.” - Ceyda Oner, IMF.

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, and in turn, household incomes 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. Recent research from the Angus Reid InstituteOpens a new website in a new window 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 BoC is taking steps to fight inflationOpens a new website in a new window, 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 rack 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 1 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, and buying 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 1 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 have a hobby that could turn into a side business, or 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 if moving somewhere less expensive is an option – particularly if you can work remotely. If you want to stay in your local area, you might consider downsizing and taking on a less expensive property.

What's next?

The information provided is accurate to the best of our knowledge as of the date of publication. This information is general in nature, and is intended for educational purposes only.

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