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With high inflation, climbing interest rates and a potential recession in 2023, many Canadians are starting the new year financially stressed. Here are some ways to save money and take control of your finances.sorrapong/iStockPhoto / Getty Images

If you haven’t done so already, you should probably look at your credit card statement. January can be a financially difficult time when the magic of the holidays has worn off and you’re confronted with reality, also known as December’s bills. And with Blue Monday’s arrival – supposedly the most depressing day of the year – it’s a good reminder that not having your finances in order can be a drain on your mental health.

You might also have made ambitious New Year’s resolutions, such as putting a down payment on a home, finally travelling to a country that’s on your bucket list, paying off your student debt or simply saving more.

But what’s a person making an honest living to do when interest rates continue to climb and Canada’s household net worth is falling, undermining their capacity to meet their needs and maybe have a little extra left for splurges?

Here are five ways to take control of your finances and start saving money right now.

Save on groceries

Food inflation is out of control, and Canada’s Food Price Report says the cost of groceries will increase by 5 per cent to 7 per cent in 2023, adding to last year’s record-high food prices that saw them climb 10.3 per cent between November, 2021, and September, 2022.

So what can you do in addition to buying items in bulk and switching from higher-priced foods, such as meat and dairy, to more cost-effective groceries, such as vegetables and legumes? Ensure that you’re consuming everything you buy each week and not letting food spoil at the back of the fridge. To cut down on food waste, consider placing uneaten and forgotten foods in a glass bowl, and using those ingredients for a meal one night a week.

Another way to save: shop for groceries through mobile apps such as Flashfood and FoodHero that partner with grocery chains to sell food close to its sell-by date at deep discounts. Flashfood works with more than 720 Loblaw stores, and FoodHero, which operates in Quebec, sells discounted food from Metro Inc., and from Empire Co. Ltd. banners such as IGA. Not only will you find groceries at discounts as much as 50 per cent, but you’ll be helping to divert food from landfills.

Two more food-saving tips? Download price-comparison apps such as Flipp. And buy bananas. Along with peanut butter and tofu, the mighty banana has managed to avoid inflation.

Build your emergency fund

Setting up an emergency fund, or “rainy day fund,” is an important part of ensuring your financial health, especially during difficult economic times when cash trumps credit. For years, Canadians could easily rely on credit cards and credit lines for unexpected purchases, but with interest rates so high, borrowing is much more expensive.

The classic rule of thumb for an emergency fund is to set aside between three and six months’ worth of living expenses, but starting with any amount is worth it once you’ve tracked your monthly spending and know how much you have left over in your budget.

While stowing money away in this fund doesn’t feel immediately rewarding – you’re not using this cash for an all-inclusive vacation or new sneakers, after all – you’ll be thankful for the cushion if your furnace breaks or you lose your job.

Prioritize your financial goals

Getting organized financially can be overwhelming. Everywhere you look, there’s differing advice competing for your attention. The key to making progress is to set financial goals, and prioritize accordingly. Focus on the goals that are aligned with your most pressing financial concerns, even if it means putting other ones on hold for some time.

The first order of business should always be to pay off credit card debt and build a financial safety net, experts say. Any remaining expensive debt, such as a line of credit with high interest, or debt with a looming payment shock, such as a fixed-rate mortgage renewal coming up soon, should also be prioritized.

For aspiring investors who have debt, there are calculators available to compare the after-tax cost of debt to the after-tax rate of return on investments and decide what to put extra money toward.

If many of these goals seem unattainable, consider ways to increase your income: negotiate a raise, get a new job with higher pay, get additional certifications or start a side hustle.

Budget and track your spending

“You cannot get ahead financially until you make a habit of spending less than you earn,” says Globe and Mail columnist Rob Carrick.

In order to do this, it’s essential to track your spending and be honest about what kind of budget you can stick to, and how. There are apps and spreadsheets you can use to keep your spending in check. Some do the math automatically while others require users to be more involved.

When sticking to a budget, it can be helpful to have a stock phrase prepared for why you can’t participate in certain activities: “I’m trying to get my finances in shape in 2023, and I’m cutting back here and there to make that happen. Thanks for understanding.”

If you have a hard time sticking to a budget, try the cash-only budget. Take out a limited amount of cash for the week, and don’t use credit cards. Some use an envelope system for this, allocating different amounts of cash to different categories.

Buy second-hand or refurbished

Need a new laptop, TV or even a vacuum cleaner? Consider buying refurbished tech to save money. Many brands such as Apple, Nintendo and Dyson sell refurbished items at discounts that come with their own warranty.

Apps such as Poshmark and Depop are great for finding – and selling – like-new second-hand clothes and shoes, while Facebook Marketplace and neighbourhood groups are good sources for gently-used furniture and other household items. Not only is buying second-hand easier on your wallet, it’s better for the environment.

Ready to get your finances in shape?

Check out MoneySmart Bootcamp, a 5-part newsletter course to improve your personal finance skills, including budgeting, borrowing and investing.

Sign up for MoneySmart Bootcamp: If you want to improve your financial fitness, The Globe’s MoneySmart Bootcamp newsletter course, written by personal finance reporter Erica Alini, is for you. Subscribe here, and you’ll receive an e-mail a week to work a different financial muscle. Lessons will land in your inbox Wednesday afternoons.