How are your personal finances coping with this current economic downturn? Budgeting our monthly expenses to ensure our money lasts until the end of the month seems to be top of mind for a lot of Canadians.
Could we be headed for a recession? There are some tell-tale signs that a recession could be on the horizon, making it more important now than ever to be cognizant of where and how we spend our money for two main reasons:
- We need to make sure that we can cover our monthly expenses without going further into debt.
- Since stress about money is one of the leading causes of mental health issues, we need to protect our mental health
Here are a few tips:
- Go through all of your subscriptions on your TV package, your tablet, and your phone, and cancel what you don’t need. A lot of times, we can get by with the free versions of the app services that we use. Yes, we might have to put up with a few advertisements, but I believe that’s better than going into debt. When my clients do this exercise, their average savings is about $125 a month, although, I recently worked with a client and when she did the exercise, she realized that she was spending about $1,100 on subscriptions that she did not need.
- Take a staycation instead of traveling abroad. Through the temporary Ontario Staycation Tax Credit, Ontario residents can get back up to 20% on eligible accommodation expenses.
- Plan trips to the local parks for a picnic or other outings in nature. This will allow you to keep your mental health in check and allow for that downtime. Research has shown that spending time in nature helps improve our mental health.
- Purchase your meats, vegetables, and fruits directly from a local farm if you can. I recently started buying my meats directly from a local farm. This saves me about $150 a month and I find that the quality of the meat is a lot better than what I would normally get at the supermarket.
- Plan your shopping trips and look online at your local grocery stores for weekly offers, then plan your meals around what is on sale.
- Another way to balance your budget is to bring in more money. Get a part-time job or start a side gig to supplement your income. I suggest this one with caution as you want to be careful that you don’t burn yourself out. Now might be the perfect time to take your passion or skill and utilize it to bring in additional income.
There’s a saying that more millionaires are made during an economic downturn than at any other time and I’m already seeing that. I’m meeting people who are making more money than they’ve ever made, and I’m also meeting people who are struggling to make ends meet.
My word of caution to the former is to take advantage of your increased income while you can and create a plan for your money. If you have debt, focus on paying it down, if you don’t have long-term/retirement savings, start investing now and, create a 6–12-month emergency fund if you don’t have one. Finally, maybe help those who are struggling by donating to your local food bank or some other ways that you find meaningful to you.