Inflation is everywhere: at the gas pump, grocery store, on your utility bills and your rent. It’s also pushing interest rates upwards.
Adding to inflation woes is the spectre of stagflation, a 1970s term describing a combination of slowing economic growth, steep inflation and widespread joblessness. A few months ago, the World Bank sounded the warning: several factors — from war to the ongoing effects of the COVID-19 pandemic — could spark a recession and a drop in global growth, leading to stagflation. Despite warnings, some economists say that stagflation isn’t likely. Others predict it is inevitable, due to high commodity prices for things like energy resulting from the Russia-Ukraine war. However, experts are saying it is unlikely to last for very long.
Inflation is our current reality so here’s some tips to deal with rising costs.
EMBRACE THE BASICS
•Identify where your money’s going.
- Reduce your expenses. Re-negotiate or shop around for better deals on car and home insurance and phone and Internet bills. Cut subscriptions and streaming services.
- Meal planning will help save on groceries. Every year, Canadians throw out about 80 kilograms of produce, costing each household more than $1,700. Make meals the nights you and the kids will be home as well as lunches for school and work. Find recipes that use the same ingredients so that you use up perishable items in the fridge and cupboard.
- Since a mortgage is usually the biggest budgeting cost, look at controlling costs by locking in a variable rate.
- With energy prices being so high, now’s the time to undertake an energy audit on your home. Winterize by sealing air leaks around windows and doors, clean and service your HVAC system and use energy-efficient lightbulbs. Cut back on vehicle expenses by carpooling.
•Identify Ways to Increase Your Income.
- Do research to determine a competitive salary range in your sector or industry in order to re-renegotiate your wage.
- Point not only to job performance but rising inflation as part of your negotiations for a raise or promotion.
- Think about creating a side business that utilizes your talents and experience. For teachers, this could be online tutoring, mechanics could fix cars on the side, or craft items can be sold online on places like Amazon, Etsy or eBay.
•Build An Emergency Fund
- Start off by saving enough money to cover your rent or mortgage for one month. Eventually work your way up to the time-honoured recommendation of having sufficient funds to cover three to six months of living expenses.
- If you have a mortgage, create two funds: one for home repairs, the other for an emergency fund.
- Make monthly automatic deposits into the two funds.
- Use your line of credit as a last resort only in case your emergency fund isn’t sufficient.
•Have a long term investment plan.
- Continue investing, even if you are building an emergency fund. Inflation-linked bonds, which benefit from weak growth and rising inflation, tend to do well. Talk to your North Peace Savings & Credit Union adviser about how to protect your investment portfolio against market fluctuations by ensuring you have a well-balanced investment portfolio.
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Ted is passionate about Credit Unions, having served within the co-operative system across Canada for over 25 years. Ted’s longstanding career began front of house serving Members, as a financial services representative with Island Savings Credit Union on Vancouver Island back in 1994. Ted furthered his education and experience within the credit union system laddering into leadership at Kootenay Savings in Trail, B.C. where he served as the senior regional manager of retail sales and…read more