Does it ever seem like your money is spent before you even get your paycheque? You’re not alone. A recent survey by the Canadian Payroll Association reports that nearly half of all Canadian workers are living paycheque to paycheque. So where is all their money going? To get to the bottom of this mystery, I took a look at the most current published report on annual Canadian household spending by category. Some results were unsurprising (the cost of shelter, income taxes, and transportation take the gold, silver, and bronze) while other results raised an eyebrow. So, let’s take a look at some of the other expensive entries and discuss the ways in which you may be able to bring that budget back to life.
5 Categories Causing Canadian Debt
1. Food Expenses
You gotta eat, but food accounts for $8,800 of Canadians’ average annual budget—that’s a lot of money. Store-bought food came in at $6,200, with dining out totaling $2,600. While it’s encouraging that store-bought food outweighs pricey restaurants and drive-throughs at Tim Hortons (Canada’s Food Price Report says that over the next year we can expect almost a 60% increase in cost—about $210 per person—when eating out versus dining in), there are still a number of ways to cut down on that food budget. First, embrace coupons. Even if you don’t feel like clipping, there are a number of smartphone apps that offer cash back on your favourite foods. Also, consider private label over name-brand items; the ingredients are usually similar and the savings can be significant. Finance expert Dave Ramsey has done the research, and says you can save about $80 per month by switching to generics!
2. Entertainment and Recreation Services
There’s no denying that going out and having fun takes up a big chunk of our change (about $6,000 worth!). So, here are a few ways to cut back on what I’d consider entertainment and recreation:
- Skip the concessions. Going to the movie theater is a favourite pastime for many, but it can be expensive. While going to matinees can save money on tickets, concessions are usually the biggest expense. So, fill up before you hit the theater, or pack some store-bought goodies in your purse or man bag.
- Explore inexpensive activities. Getting out of the house can be costly—but not if you plan “cheap dates.” A walk through the park, hiking, camping, and canoeing are free or cost next to nothing. Plus, there are many museums and galleries that offer free or discounted tickets on certain days. These make great tech-free activities for the kids, too!
- Hold at-home get-togethers. Hitting the club or an expensive restaurant can really break your budget. Instead, consider nights-in with friends or family. Play games; stream movies; crack open some wine; barbecue some food; enjoy good conversation! No matter what you do, it’s going to cost less than going out.
3. Household Operations
What does this entail? I’m thinking utilities like water and electricity, and there are a number of ways to dial these expense down. For example, did you know it costs far less to wash clothes or do dishes during off hours? It’s true. Do your clean up after 7:00pm during weekdays or anytime on weekends and you could save significantly on those hydro bills. When it comes to your hydro, consider turning the thermostat up or down just a couple degrees. The savings add up, and you’re unlikely to notice it (or, you’ll quickly get used to it). Caulking your windows, weatherstripping your door, and topping off the insulation in your attic can also pay off in the long-term during cold Canadian winters!
4. Clothing and Accessories
No surprise here. Canadians are spending almost $3,400 on clothing and all the extras every year. Since this is just an average, some are spending much more! It can be difficult, but cut back on the brand names. If you just can’t do without the right label, shop outlet stores. There’s nothing more satisfying than stocking up on items at a fraction of the cost. You can also find name brand items for less via people selling them online or going to a thrift store in a high-end neighbourhood. They may be “gently worn,” but if it costs $25 instead of $150, it’s well worth it. Last of all, know when to shop: experts agree that January is a great time to purchase winter clothing, and October is great for children's clothing because retailers are unloading their unsold back-to-school items. (So make the kids wait a month or two before refreshing their wardrobes!)
This can only mean one thing: Our cell phone and internet bills! Communications are costing Canadians over $2,200 annually, but is it really necessary? If you’re a victim of these expenses, give your provider a call and negotiate a lower monthly plan (it might take an hour, but it could save you hundreds a year) or consider giving up some gigabytes. And of course, when the latest edition of your phone is released, resist the urge to buy it; it’s not that different than the one in your hand. If your kids are the cause of these costs, limit their phone or internet usage. Consider “blackout” times where their phones and the internet are off limits. It will not only save you money, but it’s healthy for them too.
Saving and budgeting money can be simple when you put your mind to it (you might want to check out our budget calculator to see how saving a few dollars each week can really add up). If you’ve got some money-saving tips of your own, share them with us in the comments below. And if you’re saving money but still struggling to make ends meet, Credit Canada can help. Give us a call at 1.800.267.2272. We’re here to help! (And our counselling is completely free.)