As Canadians continue to cut back to deal with the rising cost of living, knowing where the money is going is crucial to saving.

The increasing price of gas and groceries has families trying to find ways to save money there and in other areas of their budget.

The Fangrad family has made adjustments since inflation drove up their food bills by more than $100 a month.

Richard Fangrad says "I don't buy lunch out, that's one way we save money. Simple things like taking the kids to the park, like a free park, a playground park or going on a bike ride."

And they expect they'll have to make more adjustments, as the price of gas is expected to cost households an extra $950 through the end of the year and a seven per cent increase in food prices will add $350 to a family's grocery bill.

Financial advisor Kyle Stewart says he and his family and working together with neighbours to cope with price increases.

"If we're at the store and there's something that the neighbour buys all the time that we also buy and it's on sale, we'll get a couple extra and we'll share it with the neighbours and they generally do the same."

Heather Cudmore is a credit counsellor with Mosaic Counselling. She says you can't start saving money unless you know where it's going.

"Look at every place you're spending money and become a better consumer, you know, don't use high interest rate credit cards, make sure you're getting good deals wherever you buy."

The Fangrad family uses the ‘envelope system' to budget, "There's housing and there's food, then there's entertainment and that type of thing. When the cash in that envelope is empty, then you either take it from another envelope, and when it's empty at the end of the month, then you stop spending."

The price shock could have been even worse if the strong dollar and heavy competition in the grocery business hadn't moderated the rise in prices, but it's still tough.

University of Waterloo Economist Larry Smith says "These are difficult times if you have a modest income. There's no doubt about that and it is hard to imagine a set of circumstances that will make that better anytime soon."

It could in fact get worse, if the Bank of Canada decides to raise interest rates at the end of May.