Are You Feeling the (inflation) Pinch?

#budgeting #emergencyfunds #moneymistakes #personalfinancetips Apr 07, 2023

Angus Reid just put out a report this month that 40% of Canadians have had to dip into their emergency funds to make ends meet this year, and at least one third have had to delay RRSP and TFSA contributions (and don't worry if you are American๐Ÿ‡บ๐Ÿ‡ธ, the stats are very similar, so keep reading).


By now we all know why this is.  The price of everything is so high!  The largest price increases most of us have ever seen in our lifetime.  


And unfortunately wages haven't increased enough to offset this.


First off, I feel you if you are finding these times particularly hard and stressful.  Personally, coming back to Canada has been eye opening for me ๐Ÿ˜ณ I know times are hard.  Mortgages are high.  The cost of food is insane.  I wish I could fix these things.  


Know that they will settle down at some point.  As they say, this too shall pass....


But what do we do in the mean time to try to reduce the pressure (and STRESS!)?  


At times like these, we need to be like Sherlock Holmes with our spending....


We need to dig deep into our expenses and understand truly where our money is going.  Unless you track all of your monthly expenses, the reality is, most of us don't know just how much and where we are spending our hard earned money each month.  


And look, there is no shame in that.  It's just reality.  I know this because all of my clients do an expense audit when they join my program, and to say it's eye an understatement.  There is always something that comes as a complete surprise!   And once we have that information, we can be intentional to change it.


I'm encouraging you to pull out your bank statements and credit card statements and review at least 2 months of expenses (or 3 even would tell a good story!).  


Categorize all of your expenses and review the percentage of each category to your net monthly pay.


Your NEEDS should be about 50% of your net pay.  Needs include:  rent/mortgage, food, utilities, essential healthcare, transportation to and from work, daycare.  


20% should be your investing, saving & debt contributions (and if you have high interest debt like credit card debt - the percentage should be higher until it's gone).


The remaining 30% is what is left for your WANTS.  This is everything else, everything that is somewhat discretionary.   This is usually where the surprises arise.  So review each category carefully.


If you're discretionary % is higher than 30%, I encourage you to dig deep and see what you can reduce (for now).


I also encourage you to review all your bills, subscriptions, account fees.  Can you reduce the plan/package you are on?  Can you eliminate subscriptions that are underutilized?  Do you have recurring charges that need to be cancelled?  Review everything!  I bet you will find something.  


Things change.  Our behaviours change.  Our patterns change.  With these changes, we need to ensure our finances are reflecting this also.


I promise you this little exercise is painful to do (both tedious with your time + emotionally tough to expose all your financial laundry).  But, it can be one of the most powerful ways to make a change and ultimately, improve your financial life and health (*think - less stress!).


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Much love, gratitude and money xx