Backpackers

Young money

Live within your means, start saving early and continue saving over the long haul – these are the basic building blocks of a secure financial future and sure, it sounds simple enough but in practice it can be challenging. Working, studying, keeping up with friends and family, travel, sports, hobbies – some combination of these probably keep you very busy. Simply put, life can make it challenging to set aside time to think about your finances and balance your money on a regular basis. And life happens – goals change and surprises (of both the good kind and the unwanted kind) pop up and can alter your plans.

So how do you manage it all? There’s no magic one size fits all way. Personal finance takes time and commitment – to your present and future. It means periodically reviewing your spending plans, making a plan that includes your short- (1-2 years), medium- (3-5 years) and long-term goals (5-10+ years) and being accountable with your progress, and ensuring you're adequately protecting yourself, your family and your future.

It also means filling in any gaps in financial education so you can make the best decisions for you, based on your situation and your values. That too can be a challenge given how much information is available; it can be hard to know where to start and who/what to trust. We can help. Below are what we think are some of the best unbiased resources available for common questions:

I know I’m supposed to have a budget but where do I start?

We’ve got you covered:
  • Start with the basics, courtesy of the Financial Consumer Agency of Canada.

  • For soon to be students, or students that have yet to start a budget, be sure you’re accounting for all your school-related costs.

  • If you’ll be moving out soon, read and incorporate these costs of living on your own to your budget, courtesy of the folks at GetSmarterAboutMoney.

  • Because this needs to be an ongoing exercise, periodic monitoring and (re)evaluation is needed. You have choices in how to do so: manually via spreadsheets or utilize a service like YNAB

Where do I put my money? 

  • GetSmarterAboutMoney has great section on bank accounts.

  • For comparisons of savings accounts to squirrel away rainy day and emergency funds that can help you find the best account and institution for you, check out Nerdwallet’s Banking section.

  • For your money that’s earmarked for specific goals like making a large purchase, saving for a child’s education or retirement, there are other types of accounts that will be beneficial to you. Learn about RSPs, TFSAs, RESPs and RDSPs (and more!) by going straight to those who make all the rules.

I have a lot of questions about debt:

  • I want to be smart about using credit…what do I need to know?

    • The folks at the Credit Counselling Society have your answers and created a great Credit section on their financial education site, MyMoneyCoach.

  • What credit cards are out there and how do I choose which is best for me?

    • Nerdwallet’s Credit Card section is a great place to start.

  • I have accumulated some debts that I want to pay down. How do I figure out the best path?

  • Where can I learn about student loans?

    • Start with the federal government’s Education Funding site, which also has useful information on applying for grants and scholarships!

What should I know about investing?  

  • Firstly for motivation to start and continue investing, observe the power of compound interest (numbers rounded, assumes 6% interest per year):

    • Sam started investing about $400 monthly at the age of 25 but stopped saving at 35 (for a total of $48,000 in contributions). At 65, without any further savings, Sam would have saved about $395,000.

    • Chris started investing $400 each month later in life from the age of 35 and kept saving until he turned 65. Total contributions = $144,000. Chris’ savings totaled about $402,000 at age 65.

    • Ashley started saving early and kept saving. Ashley started investing $400 each month at the age of 25 and kept saving until she turned 65, contributing a total of $192,000 in that time. What did she have at age 65? $796,000!

  • Secondly, learn all you can because a strong investing knowledge base not only helps you make the right choices for you and your goals but also provides protection against the most common of investor pitfalls: letting emotions lead decisions. The Investing section of GetSmarterAboutMoney, which is run by the Ontario Securities Commission, has information you can trust. Be sure to check out their excellent section on Understanding Risk  as well as their Investing Products section to demystify stocks, bonds and more.

I’m thinking about real estate. What are the resources I should check out?

  • The Canada Mortgage and Housing Corporation (CMHC) has what you should know for renting or buying a property. Their buying guides should be required reading for any prospective first time buyers.

  • Ready to take the plunge and become a homeowner? Be sure to check out NerdWallet’s Mortgage section that will help you navigate everything you should know about financing a home, including finding the best rates for a mortgage.

I have a partner and it’s getting serious…what do I need to know?

  • A lot. Read everything here.  

Insurance is confusing to me. How do I find out more about what types of insurance I need and how it all works?

  • There are many types of insurance products covering your life, ability to earn a living, health, property/belongings and more. Get started with the help of the Financial Consumer Agency of Canada’s Insurance guides.

  • Two Public Service Announcements:

    • Your ability to earn a living is tremendously valuable so pay special attention to how to protect yourself with Disability Insurance.

    • Do not rely on mortgage insurance…it is not guaranteed to pay out!

I’m young, do I really need a will?

  • Yes, you do! And not one made from a will kit. You also should have a Power of Attorney and a Personal Directive (sometimes called a Living Will). Start here, select your province and learn about these documents and the requirements applicable in your province.