Surviving the slump: how to save money on a limited income

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WATCH ABOVE: When we’re barely able to meet expenses in the present, saving money for the future may seem difficult. Calgary financial educator Ben Eggen has creative ways Albertans can start tucking away money, and explains why having a savings fund is so important – Mar 23, 2016

Saving money may be the last thing Albertans want to do amid a rising unemployment rate in the province, but there are certain habits you can change to deal with the economic stress.

Learning how to hold onto your funds is one way to combat money troubles and survive the financial slump.

According to the Alberta government, the province is currently at a 7.9 per cent unemployment rate this year, which is a 2.5 per cent increase from last year’s numbers. Alberta’s youth unemployment rate has also increased to 12 per cent, up from last year’s 10.2 per cent rate.

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Preparing for the future with a limited income may be challenging, but Ben Eggen, a financial educator with Calgary Credit Counseling Society, has ideas on how to do it.

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Eggen and Stacy Yanchuk Oleksy, the Credit Counselling Society’s director of education, put together a webinar about ways to survive on a limited income, targeted specifically for Albertans dealing with the slump in oil prices. The webinar is free for access across Alberta.

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He said tracking what you spend will give you real numbers to work with, identifies your habits and shows where you can make changes.

The key reasons for financial troubles include the excessive use of credit or using credit for living expenses, unemployment, lack of financial education, as well as educational expenses, Eggen says in the webinar.

“Consider your circumstances and be realistic,” he said. “Think about paying off smaller debts to free up monthly cash flow.”

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He advises when dealing with smaller budgets, it’s important to change spending habits immediately, as we tend to have more control of our expenses rather than our income.

3 ways to deal with reduced income:

  1. Develop a realistic household budget that works with lower income.
  2. Change spending habits to minimize unnecessary expenses.
  3. Have an emergency fund – the extra money will pull you through when financial emergencies strike.

Having everyone in the family aboard when changing spending habits is very important, Eggen explained.

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“It’s easier for everyone to do this as a family, rather than having only one or two members of the household change their lifestyle.”

Eggen emphasized how tempting it is for households to use credit when the income is deemed insufficient in covering for household expenses, but this will actually increases the expenses moving forward.

“This may work for a short time, but if this pattern continues, debts and credit problems will arise.”

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