Get out of debt and stay out of debt (this is the most important advice we can give!)
At whatever age you retire, you must own a home
and be free of non- tax-deductible debt. Otherwise, your income will be reduced, and
there would be very little money left after rent and/or loan
payments. If you retire at 65 and will be relying on
CPP, OAS and GIS, the maximum you will receive is
about $1,550 per month for a single person, or $2,710 for a
couple. This is not the time to find out that you don't have
enough money to retire comfortably. See our Seniors
page to find out how much your pension will be when you
retire. If you want to retire early, or have more
money when you retire at 65, you will need either savings or a pension from your employer.
If you have or plan to have children, you should
try to ensure that the mortgage on your home will be
paid off before your children enter university.
This will free up funds for their education.
It is very important to stay out of debt until you buy a
home. Debt is the reason many people are not
financially successful. Being in debt can be very
stressful, and can reduce your quality of life.
The information below will help you on the road to
financial freedom.
Start saving money as young as possible.
If
you are still living at home and you don't have a budget,
now would be a good time to start. You
shouldn't have accumulated any debt yet, and it is
easier to stay out of debt than to
get out of debt. The earlier you start
saving, the easier it will be, because it will
become a habit. If you can take
advantage of your parents' generosity by living
cheaply at home, you can get a good head start on
your financial freedom. This will mean
making an effort to live harmoniously with your
parents, which should not be a problem if you look
at the long term benefits. Besides, just
because your parents don't want you out drinking
all night or robbing gas stations doesn't mean
they are trying to spoil your fun.
Pay off your highest interest rate debt
first, which would probably be your credit
cards/bookie/loan shark. All of these
have very high interest rates.
If you cannot pay the entire balance of your
credit card at the end of the month, stop
using your card and cancel it.
You should only have one credit card.
If you have more than one, it is more likely
that you will run up your credit card
debt. There are more bills to pay, and
it is more complicated. Figure out which
card is best for you, and cancel the rest.
If you have more than one credit card with a
balance on it, concentrate on paying one off
completely first. Then pay off the next,
and so on, until you are down to one credit
card. Don't use this card unless you are
able to pay off the balance at the end of
every month.
Pay off any other loans that you have,
paying off the higher interest rate loans
first.
After all your non-tax-deductible debt is
paid, start saving for large purchases such as
appliances, vehicle, etc., so you can pay cash
for them.
If your pay yourself first money is going
into RRSPs, have the contributions set up as
automatic deductions from your payroll to be
transferred directly into your RRSP.
This way you will get your tax savings
immediately.
If your pay yourself first money is going to
pay down debt, set up automatic transfers from
your chequing account.
Use only one financial institution.
Use only one credit card, and have your
regular bill payments (electricity, gas,
cable, telephone, etc.) charged to your credit
card. You will have fewer monthly
payments to make.
Check your credit card transactions
frequently. This can usually be done
online.
Do as much as possible online, reducing
trips in your vehicle.
The information on this site is not intended to be a
substitute for professional advice. Each person's situation differs, and
a professional advisor can assist you in using the information on this web
site to your best advantage.
See our Business
Directory for tax, accounting and finance-related firms in your
area.
Please see our legal
disclaimer.
