Episode #57: You’re Not The Only One Struggling Financially Right Now - Here’s What You Can Do
If you’re feeling like it’s becoming harder and harder to make ends meet financially right now, and it seems like you’re struggling more now than you were just a few years ago, you’re not imagining it, and it’s not just you. Over the course of the last two years inflation has soared and wages have stagnated. This has left a lot of regular working class people worse off financially because the cost of living has increased at a significantly faster pace than our salaries have increased.
If your job has offered you the standard ‘3% raise’ over the last couple of years, you haven’t actually received a raise, instead you’ve lost money dollar for dollar, because that 3% raise hasn’t kept up with inflation. This really sucks in a world where it feels like it costs money just to step outside of your front door right now.
You might also be experiencing the feeling that you’re the only one struggling, or that everyone else has so much more than you, because our ability to debt finance our lives (ie: use credit) is at an all time high. It used to be that when you wanted something, you had to pay for it outright in cash, but now we’re allowed to purchase basically anything we want on credit, and we’re doing it in droves. Is it a good idea? Noooo. Is it tempting as heck? Absolutely. Are so many people buying things that they can’t afford and hoping they’ll be able to pay for it in the future with a raise or a new job or a golden business idea? Yeah, and it’s not going to end well for the vast majority of those people unfortunately unless we make some changes to our financial education system and the frankly predatory credit system.
So, just know that it’s not just you who’s struggling right now. Inflation is making day to day living so much harder, and it’s important not to compare yourself to other people who are debt financing their lives right now. That’s not what you’re going to do, instead you’re going to follow these 6 tips to help you create a more comfortable financial life in the face of skyrocketing inflation.
Tip #1: Increase Your Income
Your first line of defense to combat inflation and the effect it’s having on your life is to learn how to increase your income, and the best way for most people to do this is by learning to negotiate to successfully ask for a raise. A survey showed that 70% of people who ask for a raise get one. 70%! Conversely the same survey showed that ⅔’s of people never asked for a raise. This means that most people never ask for a raise, and those who do have a 70% chance of getting that raise when they ask for it. That makes a pretty compelling case to use this as your first line of defense against inflation.
Tip #2: Renegotiate Your Recurring Bills and Payments
There are so many recurring payments and rates that can be negotiated, and it’s up to you to try. Companies don’t want to give you the best deals, you have to ask for them. You can negotiate things like your internet and phone provider bills, your car insurance rates, and even the interest rate on your credit card. I’ve created a whole episode of the how to adult show about negotiating bills, and I highly encourage you to watch this, then make a list of your recurring payments or subscriptions that you think can be negotiated and just give it a try. You’re not going to lose anything other than a bit of time, and I can guarantee you that you will have success negotiating even just a few of your bills down from your current rates. Even if these are small subscription bills, they add up and make a huge difference, and bigger payments like your car insurance can make an even bigger difference to your bottom line each year.
Tip #3: Start Tracking Your Expenses
If you’re struggling to make ends meet and you don’t account for where every dollar you spend goes yet then this is hands down the first thing you need to learn to do. It’s time to learn exactly where every single dollar of your hard earned money is going, and to start to understand what expenses you value, and what expenses you can cut out without feeling like you’re missing out on all the good stuff in life. I LOVE teaching about values based spending , and I have loads of other episodes about expense tracking up on the How To Adult Show. I have a whole expense tracking and values based spending course you can sign up for to learn this skill in more detail if you’re ready to really dive in. I usually advocate for spending money on the things that make you happy, and that build a life you’re happy to live in, but this article is about how to live within your budget as inflation continues to grow, and this probably means cutting out some non-essential expenses. You don’t have to live without ‘nice to have’ things forever, but it’ll really help to relieve the pressure temporarily while you jump on bigger topics like getting that raise.
Tip #4: Focus on Your Big Three Expenses
Be careful not to spend too much energy focusing on controlling your little expenses, instead of taking a long hard look at your big expenses. When it comes to saving significant amounts of money you’ll see the biggest difference when you examine your big three expenses, namely where you live, your transportation if you have a car, and your taxes.
Taxes are the single biggest expense category that a Canadian family has every year and you NEED to learn how to minimize your tax burden because that alone will save you hundreds to easily thousands of dollars a year. Before you spend time making a detailed meal plan to eat every meal cooked at home instead of ever picking up takeout if your rushed or tired or uninspired, look to learn about the Canadian tax code first, and find yourself a great accountant who will help you learn what you need to give them to reduce your tax burden.
I’ve created a great episode all about how the Canadian tax system works that will give you a beginner friendly overview, and then I also have episodes talking about different tax deductions, using your RRSP to minimize your tax burden.
You can almost definitely save money on your transportation costs if you own a car, whether that’s re-negotiation your expensive insurance payment, refinancing your vehicle if you don’t own it outright, and moving to a more affordable model of vehicle because SO many people drive expensive ass trucks around this country without having the earnings and savings to justify expensive ass vehicles. There’s a reason that statistics tell us most millionaires drive Toyotas.
Finally, look at how much you’re paying for your housing. This one can be hard, especially if you’re currently paying for more house or apartment than you can afford. It can be tough at first to move down a level, but other than taxes this can save you the largest amount of money out of your budget annually. Whether it means downgrading the space that you live in to a smaller space, an older home, or an apartment with less view or only one bathroom. You can also save vast amounts of money on your utility bills by moving to a smaller space, not to mention property taxes, and upkeep costs like re-doing your roof. Don’t gloss over these important expense categories just because you’ve told yourself you’re going to make coffee at home this month instead of buying it on your way to work.
Tip #5: Build Your Emergency Fund
This is going to help you feel safer in the face of rising costs of living, low wages, and a changing job market, and it’s going to change the way that you view money and make decisions around money when you’re no longer in that place of ‘fear’ about your finances. If you can temporarily cut back on some of your big living expenses as well as your ‘for fun’ living expenses, and divert all those extra savings towards building up your emergency fund, you’ll be amazed by how quickly you can fill up that account.
Of course the changes you can make vary for everybody, but if you’ve been struggling to fill your emergency fund this means making some significant but temporary lifestyle changes in order to fill it up. This could mean moving back in with your parents for a few months to save rent, moving in with roommates for a few months, subletting the second room in your apartment to someone who needs temporary accommodation, putting off buying a new car for a few months, getting rid of all your subscription products that aren’t work related, or selling some of the ‘luxury’ items you own knowing that you can get them again later when it’s more affordable to you. The key here it to tell yourself that this is temporary, calculate how much you can save by just a few months of doing whatever it is you decide to do, and commit to it happily, knowing that in a few months you can go back to your lifestyle but this time with a healthy cash cushion in your emergency fund to help you sleep at night. It’s so worth it.
Tip #6: Postpone Big Ticket Purchases
In this category I’m mostly talking about home building or remodeling costs, and car purchases or leases. These costs have gone up drastically in the last few years because of supply chain issues and labor shortages, and these costs will come down. Already we’ve seen the price of wood drop significantly again, seen the price of used cars come back down significantly. So, don’t build that fence, don’t start building that dream home, don’t buy yourself a brand new ford bronco, and don’t start that kitchen remodel until those prices become more ‘normal again’. Yes inflation will always affect these expenses, but when you look at how much they’ve outpaced inflation in the last few years you can see that it’s not normal, and the natural forces of the world will bring those prices back down to ‘normal person and normal salary’ levels in a little while.
Overall this cycle of intense inflation will level out, but that doesn’t mean you just have to ride it out, go into consumer debt, and hope for the best. The big corporations, banks, and businesses that are profiting off of this don’t have your best interests in mind, and it’s up to each of us individually to look out for our best interests financially and to implement some changes into our lives financially to make it through this period of time unscathed.
So, follow the tips in this episode that apply to you, start talking about money and finances with the people close to you, and above all remember that you’re doing a good job. The rising costs of living to median wages right now is causing problems for a lot of people. Even though you might feel powerless against it right now, there absolutely are things you can do to get a handle on your cost of living and reduce the stress you’re feeling.
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