Rising Inflation- Can you handle the heat?
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By Bromwich+Smith Staff | 997 words | Reading Time: 5 minutes | Date: 2022/08/23
Summer months bring summer heat, but that’s not the only temperature that’s rising these days. More than half (52%) of Canadians can not manage an emergency over $1,000. With two out of five saying a bonus or surprise additional payment of $5,000 would alleviate debt. For 10% of Canadians, any bonus payments would go towards day-to-day expenses.
We know inflation can be difficult on many levels so how can we best prepare to avoid adding debt when prices keep going up?
- Emergency Fund.
We often say the best way to avoid debt is to put money aside, even while you are paying off debt. We know it may sound counter productive to put aside money if you are currently paying off other bills but having a savings account can save you in an emergency. Think about it this way, if you were to lose your job tomorrow do you have the financial means to support your family until you find a new job? If you had an unexpected vehicle expense, or needed to travel for a funeral could you do it without using credit cards?
If the answer is no, then you need to consider putting aside money every paycheque and start your emergency fund. If you were to pay for these items on a credit card, the interest would add up and end up costing much more than the original price tag. Big ticket items that can be paid with cash will help your bank account stay balanced.
Start small, even if you are currently in debt, paying off creditors or in the process of a consumer report or bankruptcy putting aside a small amount each month will ensure that if an emergency occurs you are as prepared as you can be.
- Consider Your Debt.
If you are living paycheque to paycheque, or are unable to pay your bills in full each month you may need to consider your options. Overwhelming debt happens to thousands of Canadians each year, with 2.9 out of every 1,000 filing for a Consumer Proposal or Bankruptcy in 2021. Think about a typical month, how much money do you bring in? How much do you spend? How much do you really spend? Think about the incidentals, dinners out, kids’ activities, household bills. Are you seeing red? The average Canadian who filed for a Consumer Report or Bankruptcy in 2021 said each month they were spending $182 more than they were making. If you see this as an ongoing pattern in your life, you may want to consider debt relief options. ( LINK https://www.bromwichandsmith.com/your-options)
- Be Aware of The Cost.
You may have heard the term Shrinkflation recently. Shoppers heading to the store are finding that items may not be going up in price but are decreasing in size. The change may not affect you when it comes to a singular bag of chips, but if you need to purchase bigger ticket items, or go through items rapidly you will start to feel the difference. Be aware of the new costs and do your research. Certain brands may be maintaining their sizes and prices, while others may be shrinking. Look through your stores flyers before you shop, make a list and be aware of the sizes.
Knowing the cost doesn’t always mean looking at the price sticker. We know there are often other things involved. Paying cash or debit, when possible, will help you avoid extra costs later on. If you are unable to pay off your credit cards in full each month, that extra trip to the grocery store will end up costing more than you originally expected. For some the extra interest will not affect anything. For others, the extra bill will be another item that needs to be paid, and the longer it takes to pay off the more it ends up costing.
- Increase Your Income.
Your employer is likely very aware of inflation, but are they considering it when they look at annual increases? This is the time of year many businesses will be putting together the upcoming budget and that means they may be looking at your salary. If your annual review is coming up, do your own research. Make sure you are aware of inflation rates, as well as the going salary for your position. Have you been an exceptional employee? Consider the amount of time you have been in your current role, and any big projects you have worked on. By knowing what you are looking for and having research to back it up you may feel more confident asking for an increase.
Side hustle is another term being used these days. If a salary increase is unlikely, consider where you can bring in extra income. For some it can be as simple as decluttering. You may have bins of baby items that you no longer need, and by selling at local stores or online you not only pocket some money, but you clear up some space in your home. By listing items seasonally, you may be able to make more money quickly- lets face it who wants to buy a winter jacket in the middle of summer. Maybe you are an amazing gardener with everyone wanting to know your secret tips- host a Tips and Tricks seminar and sell tickets or advertise that skill as a side business.
Prices will rise and fall and being aware of the current market will help you make the best financial choices for your own situation.
With inflation rates on the rise, we often hear about the decreased recession. For more tips of how to recession proof your life, check out https://www.bromwichandsmith.com/blogs/can-i-recession-proof-my-life
No two financial stories are the same, and because of that Bromwich+Smith has a number of debt relief strategies to help you regain control of your finances and get your life back on track. Reach out today for a free, confidential, no obligation consultation. Bromwich+Smith’s Debt Relief Specialists are available by phone at 1.855.884.9243, or request a call back at contact us page. We want to see you flourish!