Budgeting for High Gas Prices this Summer

By : Lisa Mikhael, CFP

Like many Canadians, you may be wondering how the recent spike in gas prices will affect your summer plans and overall financial situation. Some of us will choose to vacation closer to home, others will cut back on other areas of spending to compensate and chances are most of us will seriously consider conservation strategies such as taking public transit and planning out our errands in order to deal with the reality of paying so much more at the pumps.

Budgeting is a term we are familiar with when it comes to money but one can also budget time, resources and yes, you guessed it, fuel consumption! I will talk about how managing your cash flow can go a long way in finding extra funds to allocate to higher gas bills, but first, let’s explore the different ways we can budget our gas consumption.

Here are some tips on how to get the most out of a tank of gas:

• Ensure your tires are inflated to the proper pressure.
• Travel light. Remove any unnecessary items from your trunk that add extra weight to your vehicle.
• Plan out your errands to travel the least distance possible. Shop locally or on your way home from work to avoid any winding and/or unnecessary trips.
• While traveling on highways, use cruise control whenever possible to regulate your speed.
• Travel at the speed limit. Reducing your speed by 10 km/h will result in a 5% improvement in fuel efficiency.
• Keep your vehicle well maintained – regular maintenance will ensure your car is running as efficiently as possible.
• Limit the use of your air conditioner as it uses a considerable amount of gas when in operation.

Now that we’ve explored the various ways to conserve as mush gas as possible, let’s look at your financial budget and where you might “find” money you can allocate to those higher gas bills.

Start with the fixed bills and see where you can shave a few dollars here and there. For instance, how many of us subscribe to a million channels on TV but only watch a few of them? Look at your cable package and see if you can downgrade to a less expensive plan. Similarly, take a look at your internet, telephone and mobile phone plans. Is there a less expensive alternative that will meet your needs?

Many people are surprised by the amount of bank service charges they pay each month. Do you have a tendency to use other bank’s ATMs on a regular basis? Not only do you pay the convenience fee to the other bank, but your bank is also charging you, resulting in fees upwards of $3 per transaction. Also, check with your bank to see if they offer an all in one package suitable for the number of transactions you typically make in a month – this will save you a lot in transaction fees. Or better yet, switch to a bank that has no fee banking.

Pay off your credit cards in full each month. Carrying a balance of $1,500 at a rate of 18% means $22.50 per month of your hard earned money is going to the credit card company instead of to you. If you are not in a position to pay them off in full now, curb your spending until you reach this goal. You will have more disposable income for yourself in the long run.

Lastly, consider how you might cut down on your variable expenses such as eating out, entertainment, clothing and household items. We may think we need that new outfit or that we have to eat out at lunch every day but these are simply habits that can be modified. By keeping track of how much you spend in each of these areas, you can make a conscious decision to cut back in order to allocate money to higher priority items, whether that be having enough money for gas or going on that family vacation you were looking forward to this summer.

So although gas prices have sky rocketed and there is little we can do about that, we can certainly modify our own habits to improve fuel efficiency while driving and tighten up our spending so that we won’t need to take out a second mortgage on our home in order to fuel our vehicles.