Over the next six weeks, as part of the ‘Out of Pocket’ series, Global News will examine how inflation is impacting Canadians from coast to coast.
Amid still-high inflation, many Canadians have been struggling with the surging costs of everything, pushing them to rethink their spending plans.
With many strapped for cash, that could mean having to turn down invites to dinners or big events like weddings. But how can it be done confidently?
Experts say being honest, setting clear boundaries with people, and coming up with budget goals can help generate confidence.
“It’s OK to say no to people who don’t have your best interests at heart,” said Alyssa Davies, author of The 100-Day Financial Goal Journal and Financial First Aid.
“And one of the ways to do that is just by opening up a dialogue to talk about money in the first place because so many of us actually don’t typically have those conversations with our loved ones.”
Social stigma around money
Davies explains that many people have been taught that it is rude or taboo to speak about money.
“It can actually make it difficult to do anything with your social circle if you’re completely unaware of what the threshold is for what you can spend on an event or a birthday party, so I feel like the stigma has always been there,” she said.
However, Davies thinks it has become easier for people to talk about money nowadays because of inflation and the rising costs of living.
According to the latest report by Statistics Canada, the annual rate of inflation slowed to 6.3 per cent in December 2022 as consumers paid less for gasoline and even found modest relief in some aisles of the grocery store.
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Still, knowing how to say no when it comes to spending can be difficult.
“It starts with talking about money with the people that you need to set those boundaries with because if you don’t open the door to those conversations, they might continually push and not really understand where you’re coming from,” said Davies.
“You don’t have to tell them your full financial story, that in itself is a boundary. But finding a way to open the conversation to say, ‘This isn’t in my budget this month,’ or ‘I can’t afford this,’ and that should be enough.”
Setting financial goals
Darryl Brown, an independent financial consultant based in Toronto, told Global News that Canadians need to understand that everyone is in a “very similar situation” where over the past few years, due to COVID-19 and inflation, people have seen their expenses go up.
“Some people have had their income interrupted because they may have been out of work due to illnesses or things (happening) in the family,” said Brown.
“So … people should not feel alone.… And even though it’s causing a lot of anxiety to perhaps decline events, I think anyone should feel honest about saying, ‘You know, this doesn’t work for me at the moment.’”
Brown says the first step is to know precisely what your objectives are and to set a financial goal for yourself.
“Certain people have a target to pay down debt or it could be saving up for a down payment on a house. It can just be setting aside cash in an emergency fund,” Brown said.
Setting financial goals like these, he said, can help people feel confident in saying no to things that don’t align with their objectives.
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But while setting those goals can help, negative feelings can still pop up when a person has to say no to something.
“Saying no is like setting a boundary. And when you have really clear boundaries, you’re not saying no to someone, you’re saying yes to yourself,” said Brenda St. Louis, a financial therapist and money coach based in Vancouver.
She explains that saying no can make people feel bad.
“(Saying no can make you feel like) you don’t have a choice, you don’t have freedom, but you can flip it and say, OK, what are you saying yes to by not making this choice?” said St. Louis.
Nurturing relationships on a budget
St. Louis coaches her clients to be honest with themselves about their financial situation while finding creative ways to nurture relationships while still saying no.
“Saying no can come in lots of ways. It doesn’t have to be ‘no’ right away. It’s like, ‘I am so excited that you’re getting married. I’m not going to be able to make the wedding. But can you come over and we can celebrate for dinner at my place?’”
She says that kind of approach applies to all sorts of social events or outings, big or small, where taking initiative can build confidence and help people save money.
“Be the leader, not the follower…. Make the invites and go for a walk, or (invite them over) to have dinner at your house, or go to free art gallery openings,” said St. Louis.
She explains that taking the lead on creating social connections on budget-friendly outings that don’t involve drinking at a bar or going to an expensive dinner will ensure that “those relationships are not going to suffer.”
But if there’s a big event coming up like a wedding that a person doesn’t want to miss out on, Brown says it would be important to then build one’s budget around it.
Frugal habits to save money
In this case, the event would fall under discretionary spending, and according to Brown, the general rule is that if you’re spending more than 20 per cent of your income, that’s a high number.
“Everyone’s going to have a different number that makes them happy and is what they need to show up,” said Brown, adding that the discretionary budget of someone living in Toronto might look different from that of someone living somewhere else, so there are many factors to consider when creating a budget.
“The more you want to do something, the more it should sit higher up in your budgeting and forecasting.”
He also explains that if someone ends up not saving up for the big event and doesn’t want to dip into their emergency fund or doesn’t have the savings to fall back on then they don’t have to feel obligated to explain.
“I think saying ‘it doesn’t work for me’ is reason enough,” Brown says.
“And if people feel like they need to provide a reason or rationale, simply say, ‘It just does not align with my financial priorities at this time.’”
— with files from Global News’ Alyssa Julie and Craig Lord