High inflation can make budgeting an even bigger challenge than usual and with prices rapidly rising, it can seem almost impossible.
Higher prices mean you may need to be more strategic about your spending in order to stretch your income. Learning how to budget for periods of high inflation can help you rethink how you spend your money.
Living in these times of high inflation all comes down to budgeting. Francyne Myers, Licensed Insolvency Trustee, talks about how you can budget your way through rising costs.
More than budgeting, she speaks about:
- Maximizing your dollars – getting more bang for your buck
- Household spending – defining your priorities
- The difference between secured debt and unsecured debt
- Challenging yourself to a spending moratorium – not purchasing anything for a set period of time
- Grocery shopping – meal planning, making lists, and using cash
- Instore credit cards – taking advantage of points
Licensed Insolvency Trustees are federally regulated and approved by the Canadian government. From budgeting to Bankruptcy, you can be assured you are receiving the best unbiased advice from these knowledgeable professionals.
Read the Transcript
Wayne Kay 00:04
Welcome to the Debt Matters podcast, where we help Canadians find solutions to their debt with Licensed Insolvency Trustees from across Canada. My name is Wayne Kay, and coming up in today’s show, we’re going to be talking about tips for budgeting and stretching your dollars. That’s what a lot of Canadians are doing these days.
So what does it mean to actually go about stretching your budget? How do you save money, especially now when you’re on maybe such a super tight budget? Can you save on household expenses or monthly bills? Are the things we should look at. What about tips for using loans, credit, and banking effectively?
My guest to talk about this and more is Francyne Myers from Allan Marshall and Associates Licensed Insolvency Trustee with offices in Alberta, New Brunswick, Nova Scotia and Prince Edward Island. Thanks for being on the show.
Francyne Myers 01:00
You’re welcome, Wayne. Great to be here.
Wayne Kay 01:02
Well, we always have such great discussions, and today, I think, is just so relevant to what we are all going through as Canadians. We need to stretch the budget because of this big I word out there, inflation.
Francyne Myers 01:17
I don’t know where this is all going to end, Wayne, I must say. So this topic is definitely a very timely subject. First of all, what does it even mean stretching your budget or stretching your dollar? I just want to kind of explain what it means. Well, it’s two things.
It could be actually used as a marketing strategy by a store claiming that when you shop here, you’re going to get more for your money. So you sometimes have seen that as a bit of a marketing – shop here and your money will go further or your dollar will go further.
What I think we’re trying to talk about today is, all right, how can we maximize the value of our dollars and try and make them go further? Because things are just like you say, it’s so important these days because inflation is making everything go up.
So we really need to make sure we get more of what we call bang for our buck.
Wayne Kay 02:15
And the stats that have come out saying that, and I don’t even know how they track this, but a lot of the discount retailers have seen more people that I guess the average income is over $100,000 shopping in their stores than ever before. So that means people who are making big money are even watching every penny that they spend.
Francyne Myers 02:37
Oh, no question. When you look at the cost of gasoline, I mean, the two big ones, gasoline and groceries. Things have gone up so quickly and people’s disposable income has not had time to catch up because it went so fast.
Let’s say you had your mortgage. Well, some mortgages have even gone up because of the interest rates, variable rate mortgages and what have you. So you were okay if you were paying this much for gas, this much for groceries, this for your mortgage. And then all of sudden those three things may have gone up almost without warning and almost like it seems overnight. So all of a sudden you’re not making any more money and these three big things, or at least two gas and groceries are costing so much more.
So yes, you’re definitely going to have to shop somewhere where you can get a bit of a discount. There’s just no question.
Wayne Kay 03:41
Yes. And so when it comes to saving money, a lot of people are already on this super tight budget. So what’s your recommendation for that?
Francyne Myers 03:50
All right, well, here’s the thing. Super tight budgets can mean a couple of things. A super tight budget, if you’re on, for instance, social assistance or another very modest income like pensioners, there’s really not much that you’re going to be able to save. I think we have to be realistic. Saving money is a real luxury for people in these situations.
Priority is actually simply to meet their needs for the time being because keep in mind all these incomes have not increased with the same inflationary basis. So for people, and I deal and speak with these people every day, just actually just the necessary areas of life is their goal.
But what does a super tight budget really mean for people who have, you know, fairly good income? Like you said, you may have people who make over a hundred thousand shopping at the Dollarama.
That makes me think sometimes that when you look at their household spending – it needs to be tweaked and you need to have your, maybe your priorities realigned at that point, setting goals, reviewing your spending habits. Because saving money should be starting to take a higher priority now because we really don’t know where things are going to go.
And a lot of times when I review people’s spending habits, I find at least a few expenses that can, if not just be reduced, they can actually be cut out altogether in favor of saving money. So I guess the answer to that question is it all comes down to priorities, right?
Wayne Kay 05:41
Francyne Myers 05:43
The other issue that’s happening these days – which means that maybe saving money is not possible right now, but it might be in the future.
If someone, when money was cheap and they got a nice car and then maybe they financed one of these lovely ATVs that cost more than my car. And they’ve gotten into a higher mortgage because the interest rates were so good. They have all these payments that are coming out that you can’t do anything about. I mean, those things are called secure debt, meaning that the creditor or the person you borrow money from the bank or what have you, if you don’t pay them, they’re going to come and get something.
Wayne Kay 06:24
Francyne Myers 06:25
I find a lot of people kind of caught in what we call the trappings or the toys because at the time, prices were cheaper on goods, gas was a lot cheaper, and the interest rates were so good, that people kind of started spending on these kinds of things.
Now they have all these payments they have to make, and they’re what you call disposable income. The income they would spend on the essential items like groceries and gas has all shrunk. Because those folks may have to just bite the bullet for the time being until they pay off some of those. \
Other people who are not doing too bad because they don’t have a lot of that kind of debt will have to watch things like their credit card debt and their lines of credit and their personal loans – that is what we call unsecured debt and I would say start to pair them down. Do plan to get rid of that debt before they can really start saving because we got ourselves into a lot of debt.
Then you have the other folks who just need to kind of review their spending habits and make some decisions on where they’re going to spend their money. Maybe you’re not going to get a manicure every two weeks. You know, there’s just kind of things like that.
It all comes down to priorities and really taking a hard look at where your money is going. Your budget may not be as super tight as you think, as most people actually don’t even know where the money is going.
Wayne Kay 08:01
Right. That’s one thing we definitely learned with this show, that people don’t have any idea where they’re spending.
Francyne Myers 08:07
No. And I get this all the time, and of course, I deal with insolvency. People come to me and we talk about what they own, what their debts are, and then we start working on their budget.
And probably half the people say to me, and it’s quite shocking when you think about it – I don’t really know where my money is going. I have no idea.
Wayne Kay 08:31
But I mean, in their defense, I can understand why in a way, because we get $6 a month for this, and I’ve got to buy this for $29 a month, and it’s a recurring payment because I’ve got to keep up to it. And then I’ve got three different cell phones for the family, and there’s another $250 maybe, and all of a sudden, let’s throw in the mortgage and let’s throw in all those expenses.
And if you’re not up on it, especially now with all of these paperless bills, I can see how people can miss things here and there. Typically, everything came in the mail and it was piled up and you knew, okay, I’ve got to take care of these bills.
Francyne Myers 09:16
That is so true. Again, where things are so virtual, they’re not tactile. You don’t put your bill up on the bulletin board like I used to do, it has to be paid.
What I actually do now, Wayne, just to keep track of it, on my calendar, on my phone, I have a separate calendar called Bills, which the kids don’t have access to.
We have the family calendar, which everybody writes on – the kids when they work or when they have appointments or anything like that, that’s coming up. So we all keep track of it. And I have a separate one called Bills, which is a different color, which is only my husband and I can access because I think at this point it’s really none of the kids business, but all the bills are and what have you. I think it’s too much information for you.
Wayne Kay 10:09
Francyne Myers 10:09
But I keep track of bills that way because yes, that can get away for you. That is not those little Netflix and Crave and that comes off my credit card that I have to really work on keeping track of, because you can forget that that payment all suddenly shows up. That’s part of my budget.
But it is a matter of just trying to keep track of where everything is going and perhaps even just putting it in that, like I said, I use it on my calendar app so that I know exactly when everything is due. And I try to pay my bills as soon as they come in, even if they’re not due for like, the power bill in three weeks. And as soon as they’re paid, I put a big ‘done’ in front of it.
Wayne Kay 10:59
Francyne Myers 11:00
Yes, so I know it’s paid because things are busy and you can miss bill payments even if you’re really trying to keep track of them.
Wayne Kay 11:12
Francyne Myers 11:13
I really do try to be and I try to very well keep track of my spending habits as well. And I go through and I often counsel people to do spending moratoriums.
Wayne Kay 11:26
OK, what’s that?
Francyne Myers 11:27
Go five days without spending anything except the necessaries of life. I don’t care if you see a beautiful blouse and you love it, you cannot buy it. Go on a spending – like the cod moratorium. Go on a spending moratorium.
It teaches you again, that lovely word, discipline. And if you really are going to die without this new blouse, go back two weeks later if you really want it. Okay. But I can guarantee you ten minutes down the road you won’t want it anymore.
Wayne Kay 12:02
You’ll be fine. Just with the gas price being what it was, we just flat out said, I’m not driving any more than 200 week. And that was it. I just flat out said, so we will have to plan. On my way home from work, I’d better be stopping and picking up what I need to get, because there’s no way we’re going over this.
And it worked. We had to adjust. But it was something that worked for us.
Francyne Myers 12:29
That’s exactly a very good way to do it. Same thing.
And even though I hate it, I just want to get home after work, but if we need to pick up groceries, I will stop after work on my way home from work and pick up what we need so there’s not this extra little trip. Also, you know what works to save gas Wayne?
Wayne Kay 12:51
Francyne Myers 12:52
Not speeding. Well, holy cow. Ever thought of that?
Wayne Kay 12:57
Yeah, that’s a big one, right?
Francyne Myers 12:59
I have got to tell you, the number of people who blow by me on the highway, probably doing at least 130 in these big SUVs, I’m thinking, wow.
Wayne Kay 13:08
It’s quite something, isn’t it? Now, do you have some advice when it comes to saving money, when it comes to your household expenses or your monthly bills? Do you have something that you do there?
Francyne Myers 13:19
Yes, you know what, I was thinking about that today. And I kind of wanted to not go over the regular things that people I think would usually say that we probably all know, right?
Well, the first two things are probably, but I found that I wasn’t doing it and I got back to doing it, and what got me back doing it was strange enough the pandemic and not wanting to be in a grocery store at all and making sure I ran down the aisles the right way and have my little mask on and everything. And my God, I was so stressed every time I went in, I went in with a grocery list, I got what we needed. I was in and I was out and my God, we saved so much money on groceries.
Wayne Kay 14:01
Francyne Myers 14:03
Yes. Because normally we’d meander through we’d say, oh, look, chips are on sale, or let’s go look at this, or I need three of these cans of tomatoes because I don’t know why they’re cheaper or something.
Well, when I had a grocery list and said, this is what we need, we planned our meals, this is what we’re going to need for the next week, we saved a lot of money and our meal planning was so much better as well. And it was a habit that I got into, which was really good. The other thing which I found very interesting when I would do grocery shopping is go to the grocery store with the cash in hand that you’re going to spend.
Wayne Kay 14:46
Francyne Myers 14:47
Don’t use a debit card, don’t use a credit card. Bring, I don’t know, $100, let’s say that’ll give you two grocery bags, hopefully, you know what I mean? And then be very careful on what you spend. And it also makes you keep track as you’re putting things in your cart. I had a little calculator.
Wayne Kay 15:08
Francyne Myers 15:08
Okay. I can’t buy that today, right? Don’t really need it. It’s on sale. But it’ll be on sale next month, too. So I found those two things, having a list and then just having the cash in my hand saying, this is how much I’m spending and that’s it, I’m not going to starve if I don’t buy another bag of chips. It was okay.
Wayne Kay 15:23
Francyne Myers 15:24
Yes, it was okay.
Wayne Kay 15:26
That’s great advice. I talk about that I never have cash, ever. I just do not. But I just live my life like I’m constantly broke and it works fine.
Francyne Myers 15:35
Listen, I can’t remember if I have $5 on me right now. I’d be really surprised, honest to God.
Wayne Kay 15:41
Yes. My wife always has some, so if I ever need to borrow, she has it, so it’s okay. What about tips for using maybe loans or credit or banking effectively? I know you’ve given some advice on that before.
Francyne Myers 15:56
Yes. And this may sound like a strange statement because we’re talking about credit. So here’s I got to just say if you can avoid paying interest, do it. And you’re like, what does that mean? Because isn’t credit paying interest?
Well, you don’t have to always pay interest on credit because you don’t use credit for credit. You use credit to keep your credit score up, right? Because you do need a credit card for that. It’s a necessary evil to get your credit score up, Wayne. There’s just no way to get around it.
You need what we call revolving credit. And that’s a fancy way of saying a debit or credit card, for instance, that changes the balance every month, right? It’s just revolving. It’s in and out as compared to installment credit, which is things like a car loan, for instance, that you pay a set amount every month. You actually need those two types of credit on your credit report to have a decent credit score.
And that sounds strange if you only have a car loan, no credit card. You’re going to need to get more credit in order to get a credit score. That’s just the way it works, right? So here’s the thing with credit cards, here’s what I do. I never pay any interest on my credit cards.
I always pay my balance by or before. Actually I put something on a credit card and I pay it off right away. So that does two things for me. It gives me points on my credit card towards future purchases. So that’s stretching my dollar a little bit. It’s not that much, but it all adds up at the end of the day, right.
And it keeps me having a decent credit score, right. Because I am using it. You don’t actually have to carry a balance from month to month, and I’ve heard this before. Well, you have to carry a balance in order to get a good credit score. No, unequivocally, no, you don’t need to do that.
You can pay it off. The only thing I would say you have to be very careful of with credit cards is when they report to the credit bureau. Okay, make sure that it’s under 30% of the limit. If not, you’re going to be and don’t go over the limit because then you’re going to be paying even more because you’re going to get these over limit fees. So that doesn’t help at all for effectively using credit cards.
So effectively using credit cards, get a card that has no annual fees, there’s lots of them out there. Get one that will give you points for something that you need, right? And don’t ever go over the limit because they will charge you. And if you can pay something off, as soon as you put it on, make a payment or at least pay it by the dates due. That way you won’t be paying any credit at all, any interest, and it will be really good in your credit score.
Sometimes you can get these 0% loans or you can finance something, the Brick, Leon, things like this, right? You can finance something and it’s 0% interest and it actually is 0% interest. But what happens is people, again, they aren’t disciplined, they wait till the year or what have you, runs out and then they get all this interest, right? So if you can do that kind of financing, make sure you pay it off. A credit card will actually work for you.
You’re not paying any interest, it’s helping your credit score and you’re actually getting more bang for your buck.
Wayne Kay 19:26
And I paid attention to the last time you were on this show because you said to go get this credit card from you mentioned a grocery store. And so I went because I shopped there and so I got the credit card. Now I think I get $0.07 every time I fill up with gas.
And it’s amazing how fast I’m getting some free groceries, which we then use for special occasions. Like we just had a wedding in the family, so it made it much easier to take care of the brunch the next day or we’ll save it up for Christmas or what have you. So some of those points cards, as long as you’re not paying any annual fees and you’re paying them off very quickly, do add up and can actually help your budget.
Francyne Myers 20:08
I would say on average, because there is one purchase which is covered by a benefit which gives us points, so we actually don’t pay for it when we get these points, which is lovely, right? I would say I am probably saving sixty dollars to seventy dollars a month on groceries right now.
That is not a whole bunch in today’s world with the cost of groceries. But you know what? It’s something.
Wayne Kay 20:36
It’s a huge amount.
Francyne Myers 20:38
Yes, it’s something. It really is.
Wayne Kay 20:42
Even if it’s $10 that you’re getting free, it’s worth doing it. But I really like the way you do it. You don’t worry about it because some people say, well, I can only pay it like the very last moment because otherwise I’m paying extra or something? No, just pay these things off as quickly as possible.
Francyne Myers 21:00
Yes. Because you know what happens, too, I found, and I would say to learn from my mistakes, of course. I have had it happen before where I’m like, oh, well, that’s not due till – so I’ve done two things, forgotten to pay it because it was three weeks down the road, ergo the bills calendar.
Okay. Or by the time I got there, I forgot that I had to pay it and didn’t have the money. Because something else came up. Well, you know what? If I pay it now, it doesn’t matter what else comes up. The money’s gone.
Wayne Kay 21:31
Francyne Myers 21:33
And I’ll make due. Yes, I’ll make due. And that’s why, especially when I’m speaking with people, I would say pay it right away. It’s not making a difference. If it’s in your bank account for another two weeks, you’re not getting interest on it anyway. It’s really not worth it. The banks are not paying you that much to have another $50 in your bank account.
Wayne Kay 21:53
Exactly. We have run out of time. But I hope this has helped out somebody, and I’m sure it has, because there’s been wonderful information here on really stretching our dollars during this economic time that so many Canadians are going through. Final words of advice or anything you need to share with us?
Francyne Myers 22:12
Be mindful of where you’re spending your money these days. Not to sound terrible, but in my opinion, I think things are going to get a little rougher before they start to get better.
Wayne Kay 22:25
That’s what they’re saying, for sure. Francyne, thank you very much for being on the show.
Francyne Myers 22:30
Oh, you’re welcome, Wayne. Always a pleasure.
Wayne Kay 22:32
Well, my guest today, Francyne Myers, you can learn more or schedule a free consultation with Allan Marshall and Associates, Licensed Insolvency, Trustee. You can simply go to the website Wecanhelp.ca.
And that is it for today’s Debt Matters podcast.If you know somebody who needs this information, they can learn from it. Maybe it’s your kids, maybe it’s just a family friend. Please feel free to share the podcast link. And don’t forget to subscribe wherever you get your favorite podcast from. If you want more information, you can always check out our website, debtmatters.ca. Thanks very much for listening.
About Francyne Myers
In 2012, Francyne left her 23 year public service career and joined Allan Marshall & Associates where she completed her education and became a Licensed Insolvency Trustee in 2013. Alongside with her work she is actively involved in her local Trustee Association. In her spare time Francyne can be found fishing and spending time with her family.