In this age of out-of-control debt, reducing expenses is a priority.
A great place to start is with Canadians’ top financial guilty pleasure: eating out at restaurants and bars. Also included are coffees, and so-called treats, many of which are laced with sugar, salt, and fat.
Canada's restaurants, bars, and caterers rang up $68.1-billion in sales in 2017, a nearly 120% increase from $31-billion in 1998, according to Restaurants Canada.
As these numbers aren’t broken down into categories, I’m going to focus on food outlets that represent habitual day-to-day expenses; you know… those stops on the way to work where lattes, muffins, Egg McMuffins or maybe a Starbucks smoothie are picked up.
After a brief discussion, I provide some tips and tricks on reducing expenses and keeping more money in your possession. This isn’t an extensive list, just some ideas to get you started.
Tim Bits for All!
The chart below reflects the most profitable restaurant chains in Canada in 2017.
It’s clear that Canadians love ‘Timmies’ and their frequent visits fed that company $8.4 billion dollars over a year. That’s a lot of Tim Bits and double-doubles. Like McDonalds, Tim Hortons has a fairly extensive menu that covers an entire day’s worth of meals and treats.
Other chains offer snack meals, sit down ones, take-out, burgers-fries, and The Keg rounds out this list with its primarily dinner menu.
Reducing Expenses Challenge
What I propose to you is a monthly or weekly reducing expenses challenge. Ok, let’s start with a week since whatever I introduce will be a new wrinkle in your day-to-day.
Set a Goal and a Destination
It’s important to set some type of goal to make this cost reduction exercise meaningful. Maybe, limit yourself to $10-$20 for the week in outside-your-place meals, treats, and drinks. Having a destination for that pre-allocated money is also a good idea. How about putting it towards your smartphone bill or credit card debt?
Put Away the Plastic
Much of the spending at eateries and restaurants has been put on credit or debit cards, so it doesn’t feel like spending. All you have to do is place the new chip card on the counter top gizmo and you can leave.
Change of plan: Start paying in cash to make yourself more aware of the money leaving your possession. This also means withdrawing only a certain amount of bills from the ATM, not a handful.
'Just say No' to Buying Coffee by the Cup
It's an expensive habit that becomes more so when a pastry or doughnut is added. Buy your coffee by the pound or bagful at a grocery store. Doing so at coffee shop....well, it'll be hard to resist that temptation.
Buy a small Thermos at a discount or second-hand store and pour yourself a coffee for later. You can bring it with you each day and take sips when you feel the need. Adopting this tip, should you have the coffee habit, will reduce your daily spend by $3-$6.
Avoid Uncooperative People
When you have a new goal, paying attention to who supports you and who doesn’t can make a big difference. If you have someone picking on you because you’re no longer buying meals and snacks, mention your goal and check their reaction. A real friend cooperates while a phony one makes a fuss.
Create a Tip-Tax Card
Here’s a home craft for your spare time. Get your phone out and begin calculating what a 15% tip is on a bill of $15 up to $30 in increments of $5. Do the same for the 13% tax on the original amount. This will help in reducing expenses.
Restaurant-bound, despite Best Efforts to Avoid
If your job or circle of friends has you often ending up at a bar or eatery, remember your reducing expenses commitment. Set a budget and stay within it. To further reduce expenses, you may want to plan different activities after work.
If you’re in a group, sharing the bill is a common practice. Insist on paying for your meal, as shared meals often lead to inequalities in the payment department. If you can’t manage that, have your Tip-Tax card ready so that you pay appropriately.
Skip the Bread & Buns
Did you know that eating wheat stimulates your appetite? I learned that in a book called Wheat Belly. Restaurants, especially European ones, deliver baskets of complimentary bread products then wait 15-20 minutes by which time, you’re ravenous. You may nibble, but that’s it.
What to Order?
Go for the least expensive, healthiest option: a chicken salad or, if you don’t eat meat, a bigger salad with nuts and fruit. It will fill you up and keep your appetite in check. For those who are gluten-intolerant, be mindful that most everything in after-work pubs and grills is dusted with flour (wheat) to rev up your appetite.
Skip the Alcohol and Soft Drinks
If you absolutely must go to a restaurant, regardless of its type, skip the drinks except water. All drinks such as milk, soft drinks, and especially alcoholic ones are marked-up big time, adding an unexpected wallop to your bill. Water is better for you anyway.
With the exception of white milk, each of the other choices contains a ton of sugar which contributes to moodiness and weight gain; sugar also dehydrates you, making you thirstier.
Nuts, seeds, pieces of dried fruit, or a making up a trail mix combining all is a good start. I don’t recommend buying a mix as they’re often laced with salt, sugar, fat, and preservatives.
Any type of fruit is good and should you require a natural sugar fix, try several dates and-or figs. Avoid “nutrition” bars as they can be expensive and loaded with sugar. Cheese sticks, chopped up celery with a nutritious topping like a nut or seed butter also come to mind. Go online to find inexpensive options and YouTube for guidance.
In closing, it is hoped that these tips for reducing expenses will inspire and encourage you to begin economizing, as soon as possible. With Canadian consumer debt at a record $608 billion as of the end of May 2018, taking action now gives you a head start.
Upon reviewing the Capital One Canada study on Canadians’ financial guilty pleasures, it struck me that no one quoted mentioned a personal goal.
When people lack a personal goal that represents what they want to be doing and who they want to become, it’s very easy to be led astray. As I will illustrate, cultural-market forces can influence people to make choices they wouldn’t make if they were guided by their own compass.
Let’s begin with some stats. Canada's restaurants, bars, and caterers rang up $68.1-billion in sales in 2017, a nearly ">120% increase from $31-billion in 1998.
The Capital One Canada study found that:
- 72% of Canadians admitted that dining out was their most popular indulgence
- 71 % admitted they ordered takeout more than a few times in a typical month, spending upwards of $200 each month
- 50% said they bought coffee daily
Non-food and beverage splurging:
- 44% frequently treated themselves to online shopping
- 33% said clothes shopping, and
- 23% regularly bought beauty services
Canada's population, in comparison, rose only 20% since 1998 while consumer debt rose to $604 billion as of April 2018 from 96k in 1990. These are dramatic increases.
What has happened since 1998?
- The Internet grew to become a massive marketing engine
- Smartphones’ advancing technology made on-the-go ordering easier and eatery reviews more numerous
- Canadians increasingly sought out memorable dining experiences and its multicultural make-up encouraged them to try out different types of cuisine
- Historically low interest rates since 2009 allowed Canadians to take out more loans, spend more, and accumulate a record amount of debt
- A housing boom caught fire around 2011 & prices increased year-over-year, encouraging people to take out home equity loans to free up $ billions for renovations, vacations, and dining out
- Canadian culture has shifted to a point where debt has become much more acceptable
According to a 2016 CBC report, “restaurants are often the last thing people consider cutting back on when they need to trim expenses. People often don't think twice about going out for dinner; in fact, they justify it because food is a necessity and is a right or an entitlement.”
However, these facts only partially explain why people felt, and still feel, entitled to eat out as often as they do. And to clarify, ‘entitled’ means “to give (a person or thing) a title, right, or claim to something.”
Advertising proves Persuasive
Over the past 40 years, corporations and the advertising agencies they’ve hired, have worked tirelessly to persuade people:
- To treat themselves for merely existing and/or convince them that whatever they desire is absolutely fine because “I’m worth it.” L’Oreal (women’s hair product maker)
- That they “deserve” to have whatever has been suggested to them to make them feel good, such as that outside-the-home meal. McDonalds planted this idea in the public's minds with its 1970s slogan, “You deserve a break today….”
- To express appreciation for friends and family by taking them out to a restaurant for an expensive (you’re worth it!) meal. The Keg’s slogan, “Celebrate, Bring Together: The word “Together” is an inviting one and many people are taking them up on it.
The Great Motivator: Urgency
The ongoing advance of consumer technology is exciting and modern advertising urges us to: get on board; keep up; enjoy what others are enjoying; and, of course, share a common experience that tech promises. Mobile and Internet communications company, Fido sums up this approach perfectly with its catchy slogan: “Get it now.”
The Big Why?
The combination of self-reward and fear of missing out has short-circuited the Needs vs. Wants decision-making process that used to guide people. That was 30-40 years ago when personal debt brought shame, and dining out was reserved for special occasions, or to treat the family. Today it’s a common occurrence.
Millions of Canadians have become swept up in a ‘dining and experiencing’ frenzy while their critical thinking skills have checked out.
Importance of a Personal Goal
As stated at the beginning of this post, when people lack a personal goal that represents all that they are and who they want to become, it’s very easy to be led astray. Every great goal requires a plan, including a financial one that has boundaries, permissions, and limitations. If a person is seeking a new and more satisfying life but is in debt, they have to pay it back first.
While there are ways to gain immediate debt relief, your credit history-report is negatively affected and financial flexibility limited.
Debt limits freewill and the ability to plan for the future you truly desire. Planning also involves identifying that great goal you’d like to accomplish. Maybe it’s something you’ve wanted to do for a long time, maybe since childhood.
For those who aren’t crazy about their jobs and the 85% of people who hate their jobs, it’s likely they’re “rewarding” themselves by dining out. Coping this way very quickly turns into an expensive habit.
Having a goal you’re working towards provides powerful motivation, patience, and determination to make the habit and mindset changes necessary.
In paying down your debt at the same time as working towards achieving your goal, you earn your way towards an updated future. When your debt is paid off, you’ll be ready to seize the opportunity: the opportunity of a lifetime.
The article below outlines the importance of having an emergency fund or savings plan in place so that you are able to ride out a short-term financial storm.
by Justin da Rosa | 25 Nov 2016
In its latest survey, Manulife Bank of Canada found that over 1/3 of Canadians will find it challenging to pay their regular bills in 3 months or less, if the household’s main wage earner gets laid off.
The study further found that more than 16% will have problems with servicing existing debts if their current mortgage payments increase in any way (even if their breadwinners continue working), BNN reported.
The results emphasized the risk of insolvency that more and more Canadians, especially millennials, face. 83% of the survey respondents were in the 20-34 age group. Those found to be carrying mortgage debt seem to find themselves facing ever-growing costs and static incomes.
“The survey results [are] more reflective of monthly mortgage costs — which are a function of debt and interest rates,” Manulife Canada Chief Investment Strategist Philip Petursson wrote in the data release.
“Perhaps the emphasis is misplaced on interest rates, given the fact that interest rates are at decade lows, as opposed to the real driver of higher mortgage costs, which is housing prices.”
Manulife Bank officials advised home owners and consumers to consider various options that can help them endure the worst-case scenario.
“A financial buffer or emergency fund is an important part of a financial plan,” Manulife Bank of Canada CEO Rick Lunny said.
“A high-interest savings account is a good option. Or, if you’ve got a home equity line of credit, you could use your savings to reduce your debt and save interest — and still have access to that money if an emergency arises.”
Money Coach John Wright says:
I would recommend you create an emergency fund or savings plan that is equal to at least 3 months of your take home pay. Not sure how to do that? Check out my Debt Eliminator course.