Canadian personal finance: Introduction
Congratulations Graduates! You’ve done it! And now, at long last, you’re working. Have you been out shopping for a new car? Maybe having a look at the condo market? My advice to you is to slow down. That is why I am providing my 6 Canadian personal finance moves every new grad should make.
As tempting as it is to be making some real money for the first time, finding ways to spend it isn’t as important as finding ways to save it.
Canadian personal finance: Finances 101 for recent grads in a first job
- Pay down debt first. This is one of the most important messages that we deliver, especially for high-interest rate debt. So, hold off on the spending sprees and pay off your debts.
- Establish a budget. “It is important to set a new budget based on your new income and stick to it”, says Jennifer Auld, a District Vice-President of TD, who suggests using one of the many financial apps available to help track your spending. “You can plug in all of your fixed costs and determine what’s left at the end, for you to spend”. “It’s a critical first step in terms of establishing how much you’re able to save each month and what your discretionary earnings look like.”
- Save! Save a portion of each paycheque, even if it isn’t a lot of money. It all adds up. You will establish a pattern of saving which will be a big help down the road.
- Take advantage of group RRSP plans with matching contributions at work. It’s free money and will help you save more money, faster.
- A tax-free savings account is a great option for someone making less than $50,000 a year. Especially people coming right out of school, according to Michael Allen, senior portfolio manager at Wealthsimple.
- Don’t make any drastic changes in lifestyle. Jennifer Auld of TD Canada Trust suggests continuing to live on a student budget for a couple of months while you make a plan, including establishing your short and long-term goals. “What that allows you to do is get comfortable with your new reality before you go out and start changing your lifestyle and changing the way you live day-to-day,” said Auld.
Canadian personal finance: What to do if you are deep in debt
If you’re a recent grad, or a not so recent grad, with a high debt load and getting deeper into debt, reach out to the Ira Smith Team. We help people deal with debt on a daily basis and there is a way out. You need a plan for Starting Over, Starting Now. Give us a call today and get on a path of debt free living.