The Cost of Living

How Our Spending Habits Have Been Changing

If there has ever been a time to scrutinize how we spend our money, it’s right now.  Whether or not you understand economics and concepts like inflation, pricing policies, supply and demand, and wage controls (or out of control), the cost of living is not our friend.

Although inflation is not running rampant, prices on everything continue to creep up.  The Bank of Canada projects that inflation will run at 2 percent in 2017, which, on the surface, doesn’t seem to set off any alarm bells.  However, as the political climate bears winds of protectionism, other economic realities are becoming affected.

Prices on Imports and exports are expected to rise in 2017  We can expect our grocery bills to rise 3-5 per cent in 2017 according to the seventh edition of Canada's Food Price Report published by Dalhousie University.  So the average Canadian family will be spending over 400 dollars more for groceries in 2017.  That’s about 35 dollars a month more to eat, but when you see other commodity prices rising as well, then suddenly, we’re spending 50 to 100 dollars more a month.  In fact, projections are that Canadians will spend an average of $1600 more a year on everyday expenses in 2017.

The average Canadian will spend $1600 more on everyday expenses in 2017.
(Conference Board of Canada)

Here’s more UGH-ly news.

• The minimum wage increases, which on the surface seem to be a good idea, will lead to job losses through hiring freezes, slower employment growth, or direct job cuts during economic downturns.
• Employers will pay higher payroll taxes.
• Minimum wage earners will dole out higher payroll deductions, which reduce the value of wage increases. The Canadian Federation of Independent Business (CFIB) calculates that a $15 an hour minimum wage earner will pay an additional $700 in provincial taxes.
• In provinces like Alberta, the Carbon Tax will fuel higher energy bills and the cost of gas consumption.

So what does it all mean?  Most of us shrug it off cynically, because we feel helpless to do anything about it.  Well, actually, we have been doing something about it.  Over the last two decades, our spending behavior has been changing and the marketplace has been responding.  Let me paint you a picture.

• Research firm Mintel reports that the private-label food market grew 19% from 2009-13.

• Internet sales rose 23% in 2015 and continued at an even greater pace in 2016.  Amazon accounts for almost 30% of all internet sales.

• Discount brand retailers in Canada like Dollarama, Metro Inc (grocery) and Walmart keep rising the charts of the most popular places to shop for the basics.
• Bargain outlets such as Winners, Marshalls and HomeSense (TJX Cos.) have seen double digit growth.

The stigma is fading from no name.  No name is no shame.

For a very long time, we associated in-house brands, no-name products, and other generic brands with the notion that they were of a much lower quality.  I admit, I used to think so until I learned that companies like Cott Beverages produce President’s Choice pop.  In fact, many of the generic brands are made by the major brands.  McCain and Reynolds make many of the fries, appetizers, frozen pizzas, foils, plastic wraps and bags you buy.

Although it’s a dated report, you might get a kick out of the information around private brands from a 2014 report entitled, “The State of Private Label Around the World”.  Go to this link: http://www.nielsen.com/content/dam/nielsenglobal/kr/docs/global-report/2014/Nielsen%20Global%20Private%20Label%20Report%20November%202014.pdf

Discount opportunities are everywhere and there is a way to find them.

There are many things you can do to further reduce your cost of living.

1. If you do support name brands, you can email them and request coupons. Many brand producers will send you coupons. This can help you save at least another 10% on some of the products you buy.
2. Try using apps. Check out this website featuring many other sites and apps offering coupons and discounts. This site will link you to over 10 ways to save. http://commoncentsmom.com/2016/01/the-best-canadian-websites-apps-that-save-you-money/

I admit, I get a kick out of coming home with more and spending less.  It has become a challenge I enjoy.  It is also an education.  What I am finding is that there are many good quality products available at reasonable prices.  More importantly, it helps me sustain a cost of living that does not undermine my quality of living.  Sounds like something you might like?   Ya figure?