How to Save Money During Inflation

Inflation is a significant source of financial pressure on Canadian households. Simply put, the rising cost of goods and services means that the money you have doesn’t go as far as it used to. 

In March of 2024, the inflation rate in Canada was 2.90%, down from the high of 4% in August of 2023, but higher than the low of 2.78% in February of 2024. This comparison makes it seem like prices might be coming down, but they aren’t. They’re just not increasing as quickly as they were at the peak of inflation.

Continuous increases in the cost of goods make it more difficult to cover basic expenses and means that the money you have set aside in savings accounts has less buying power. Not to mention, inflation on high-cost items, such as vehicles or homes, can have a disproportionate effect on low-income households, making it harder to satisfy major needs like shelter or transportation for work.

This can leave less money in the budget for basic necessities like groceries. Learning how to reduce your expenses is key to saving money and avoiding debt amid rising inflation rates.

Start by Making a Budget

The first thing to do when you’re looking to manage expenses during inflation is to make a detailed budget that tracks all of your income and expenses. This way, you know how much money you have to work with and where you can make cuts in your spending.

"Make a budget that is affordable and achievable and purchase only necessities. Ask yourself if it is a need or a want!"

Jean Riddell, Credit Counsellor

Reducing Major Household Expenses

Housing and transportation costs are both major household expense categories. Finding ways to reduce these costs can prove invaluable for coping with inflation. 

Making bigger changes to your highest-ticket items can have a more noticeable impact on your finances than numerous smaller changes.

Cutting Transportation Costs

Cutting costs on transportation can have a significant impact on your budget. Some things that you can do to reduce transportation costs include:

• Leveraging fuel savings programs at your local gas station.
• Limiting your driving as much as possible to reduce fuel consumption as well as vehicle wear and tear. Some ways to do this include:
  • Using public transportation when possible.
  • Walking to nearby destinations (which provides a nice bit of exercise for your health as well).
  • Using a bicycle for intermediate distances.
  • Carpooling with others.
• Reviewing your vehicle insurance policy and asking your provider if they can offer discounts (or find an alternative provider with lower rates).

Ways to Save Money on Rent/Mortgage Payments

Some strategies for minimizing housing costs include:

• Downsizing the home. Moving to a smaller home or apartment can help reduce your housing costs.
• Finding a roommate to split housing costs with. Rather than moving, consider inviting someone you know to live with you and split your housing and utilities costs.
• Moving to a new area. Consider moving to a region where housing is lower-cost. However, be sure to account for the impact of commuting on your budget.

Housing and Transportation Cost-Saving Methods at a Glance:

Smart Shopping for Big-Ticket Items

Do you need to make a “big-ticket” purchase for your home—like a new appliance or even a new vehicle? Consider practicing some thrifty spending tips:

• Plan Ahead and Time Your Purchases. Is there a major discount event coming up soon? Is there a relevant holiday where a retailer might be looking to eliminate excess stock afterward? Check the public holiday calendar and look for times when retailers might offer better deals.
  
  
• Buy Used Rather Than New. Many businesses offer used and refurbished products at a significant markdown compared to new versions of the same thing.
  
  
• Check Local Yard Sales or Online Marketplaces. With a little bit of research and shopping around,  you may be able to find something you need that someone else is looking to get rid of for cheap.
  
  
• Consider Off-Brand Items. Brand-name items are well-known, but you may pay more for the logo on the item than for the actual quality of the product. Consider trying off-brand versions of items.
  
  
• Evaluate Needs Versus Wants. Do you need a new fridge, or does the one you currently have work fine? Take time to carefully evaluate your needs vs your wants before making a major purchase.

Managing Healthcare Costs

In Canada, the 13 provincial and territorial health care insurance plans provide reasonable access to medically-necessary hospital and physician services without having to pay out-of-pocket. However, these health plans don’t cover everything.

To help you manage your healthcare costs, you may want to consider using additional health insurance. If your employer’s health insurance doesn’t already provide coverage for additional healthcare items you might need like massage therapy, physiotherapy, or coverage of health services while travelling, acquiring an additional policy could help you control your health expenses.

When shopping for health insurance, check the policy closely to see if it overlaps with your employer’s health insurer to avoid purchasing redundant coverage. Your financial institution or your employer’s group health plan provider may be able to recommend personal health insurance plans to you to help you find the best coverage.

Managing Education Costs

Higher education can provide a path to higher earnings, but it also can lead to significant student loan debt. In the 2023/2024 academic year, the average tuition is estimated to be about $7,076—up from $6,872 in the 2022/2023 academic year. 

This means that the average college or university student who started in the 2020/2021 academic year would be facing about $27,188 in debt if they graduate in 2024—and that’s just for tuition fees. This does not include other costs like textbooks, food, housing, school supplies, parking fees, etc.

Additionally, some degree programs or specific schools will have significantly higher tuition costs than the average listed in the example.

When pursuing a post-secondary program, be sure to evaluate your student loan and assistance options, such as:

• The Canada Student Grants Program (CSGP),
• Provincial student loans,
• Student lines of credit,
• Scholarship programs,
• Financial Assistance for reservists, and
• Apprentice loans and grants.

Scholarship programs that you don’t have to repay can help you reduce your overall student loan debt by minimizing the amount you owe.

Another way to control student loan debt is to attend a smaller community college or skilled trades programs that has lower tuition fees than a big-name university.

Consolidating student loan debt after you leave college is another potential option, but this results in losing tax deductions and can result in paying higher interest rates than the government loan.

Changing Telecom and Internet Service Providers

Did you know that renegotiating your television, phone, and internet service contracts or switching to new providers can save you hundreds of dollars per year? 

For example, the Government of Canada notes that changing your internet service provider can save you $300/year. Meanwhile, changing television service providers can save $360/year and changing cellular service providers can save $240/year.

Yet, only 1 in 4 Canadians surveyed by the government renegotiated their contracts or switched providers. Taking the time to shop around (and letting your current telecommunications provider know) can help you get a better deal and save money compared to most other Canadians.

Grocery Shopping and Meal Planning

Grocery shopping can have a major impact on your monthly budget, especially considering the steep increase in the cost of food. Finding ways to manage your food costs can save you money. Some strategies include:

• Planning Your Meals. Create a meal plan for the week ahead and use that as the basis for your shopping list. Not only will you save money by avoiding unnecessary purchases, but you can also avoid last-minute, unhealthy food choices!
  
  
• Leave the Kids at Home or Order Groceries for Pick Up. If you’re a parent, it can help to use store/curbside pickup services where you order online and get your groceries loaded into your car when you arrive. This way, the kids won’t have the opportunity to ask for things you don’t need and you can avoid adding their impulse purchases to your own.
  
  
• Use Coupons. Coupons from paper flyers, in-store displays, or smartphone apps can help you save some money at the checkout line. When creating your meal plan, consider planning around any coupons you have so you can maximize your savings.
  
  
• Leverage Cashback Apps and Extensions. Cashback apps like Checkout 51 can help you save a little bit extra after you leave the store. Meanwhile, browser extensions like Honey can help you find better deals on the items you need to buy.
  
  
• Buy Generic. If there’s a white-labeled “store brand” or “non-branded” version of a product you buy frequently that is the same as the brand-name version but costs less, consider switching. These items are made using similar ingredients, techniques, and quality, but are sold at a lower price than “brand name” products. Avoiding brand names on common food items can help you save a lot of money over time.
  
  
• Eat Before You Shop. Never shop on an empty stomach. When you’re hungry, you’re more likely to surrender to the impulse to buy snacks or other items—increasing your spending.
  
  
• Buy in Bulk. Are there multipacks of things you buy frequently? If so, consider buying those items in bulk. It’s a larger up-front cost but can save you money in the long run.

Following these simple tips can help you fight the effects of inflation on grocery prices.