According to the CBC, the average Canadian owes $23,000 in consumer debt and has at least two credit cards.
Paying your bills is already an uphill battle, but it gets worse when you have to worry about money for things like investing and eventually having financial freedom.
Sure, you might be living life comfortably now. But if there are ways to make changes and improve your finances in the future, why not start small? Here's what experts recommend for getting on track financially:
Pretend you Make Less than You Do
Try putting 10% of each paycheque into a savings account. The easiest way is by automatically transferring funds from your chequing account directly into the account every payday.
Create a Budget
To stop relying on every paycheque, you must break down where the money is going. There are several ways to do so, whether using Excel or a more interactive database that helps budget to reach goals. Either way, once you find where your money is going, you can learn how to spend it.
Build an Emergency Fund
Within your new budget, break the categories down into fixed expenses (rent, groceries, utilities, etc.) and flexible expenses (entertainment, new clothes, etc.). See if you can reduce flexible spending and build an emergency fund.
Consider Downsizing in Life
Consider moving to a smaller place. Get rid of that cost of going out with friends when you could host at home! Consider if you need the newest model car when there are used options just as good.
An often overlooked aspect is how we live our lives--what things do I absolutely must have now vs later down this road?
Pay Down Debt
If you're overwhelmed by debt, try paying the minimum on all but one credit bill. Aggressively pay down that one before moving to the next. If you still feel swamped, consider consulting a company specializing in debt consolidation. They can help get your debt into smaller amounts you can begin paying off.
Don't Forget about the Future
Why not start saving for retirement now? You could put at least 3% of your paycheck into an account each month, or when you get that first raise, don't spend it - instead, add more money to the fund. Your future self will thank you!
You now have all the steps you need to change your financial direction and head down the path towards freedom. Of course, this is just a general overview, and your specific situation may require additional planning or tweaks.
We can help! Contact us today to learn more about how your home equity can play a part in this process. We want you to reach your financial goals and be free from debt!