Pay off high interest debt
- This includes any credit card loans you've racked up, or a line of credit that's maxed out and your student debt. It's really important to get your high interest debt under control. Except for your retirement fund (more on that below) before you start saving aggressively for anything else take control of your loans that are costing you every month.
Start contributing 10 per cent to your RRSP
- Start putting 10 per cent of your after tax income away for retirement from they day you start making money. If you made $10.00 save $1 for when you turn 65. Adopting this habit early in life will guarantee you have a substantial nest egg to retire with and help you feel better about your financial health.
- This is fundamental to protecting yourself when life throws you a curb ball. Calculate how much money you need every month to live. Rent/mortgage, utilities, cable/phone/Internet, transportation (make this list exhaustive). Make sure you have 3-6 months in your rainy day fund. This means if you lost your job or were faced with a large expense, no matter what happens you will be able to survive for that amount of time without any impact on your lifestyle
- Always know what is coming in and what is going out. Saving money starts with tracking where its going. Take a few months to track all your spending to see how your incoming and outgoing money flows. Build a realistic financial plan that includes all your necessities, variable expenses and your luxuries. Don't put only $50 down for going out to dinner if you spending patterns show you spend much more. This will only frustrate you because you keep going over budget. Rather see how you can trim back on those extras if you need to save money.
- Financial planning and taxes can be confusing and not all of us are good at it, seeking good advice from a professional can save you thousands over the long run. Make sure you are using a fee-only financial planner so you understand the cost of their advice up front. With an accountant find one that is available year round, you don't always have questions about your taxes during tax time. Make sure you get good references in both cases from people you trust. Never take financial advice from anyone unless you have done your own homework and background check first.