Need Help With Debt? Avoid Credit and Live More BalancedJul 05, 2016
For young Canadians needing help with student loans, credit card debt, and saving for the future, finding a debt-life balance can be burdensome. If you’re in the 20-something age group, you know that finding a steady income can be a challenge. It adds to the pressure you already feel, as anger and anxiety around money and its related challenges clearly run rampant.
In many ways, the deck is stacked against the millennial generation when it comes to their finances. Reversing the accumulation of debt at this age can be hard, but it begins with making the shift to trying to live below your means.
According to a 2012 poll by RBC, the top three priorities for young Canadians are owning a home (49 per cent), reducing or eliminating debt through regular payments (48 per cent), and general savings for an emergency fund (39 per cent). These are all achievable if you are able to live below your means. Here are a few tips for making small changes to your financial habits with your long-term goals in mind.
Be disciplined with credit cards
Of all the debts that can harm your financial well-being the most, credit card debt is near the top of the list. For young Canadians, the dangers of credit card debt are two-fold — credit cards for first-time cardholders often have higher interest rates, and paying off that debt can be difficult with other challenges. If you don’t have a steady income, paying off a debt that grows by 18 to 20 per cent per month can be daunting.
The best way to help yourself with credit card debt is to avoid it in the first place. Almost 90 per cent of Canadian adults have more than one credit card. This is okay if you’re paying off your balance every month, but if you’re only able to make minimum payments or you’re using one card to pay off another, it’s time to seek debt counseling.
Rethink small purchases that can add up
When you’re young, paying off debt can seem like a burden on your social life. You want to reduce your debt, but still enjoy seeing your friends for coffee dates, or going out to the local pub on a Friday night. While these outings are still possible, it’s important to think of your small spending in a bigger picture.
Living below your means but still seeing your friends might involve some personal trade-offs. If you’re meeting someone for drinks on Wednesday night, maybe you skip the latte on Tuesday morning and make your coffee at home. If you can plan for small savings opportunities like this, where $5 a week can add up to $20 a month, you’ll have more money in your pocket to help yourself get out of debt, while still having the opportunity to enjoy yourself.
Aim to boost your savings with each paycheque
If you want to jump start your savings, or make an extra debt payment, set a dollar amount from each paycheque and put it away in a dedicated savings account. Whether it’s a TFSA, a GIC or a separate bank account, putting away three to 10 per cent of each and every paycheque ensures your savings will grow year over year.
By dedicating yourself to these three small changes – getting help with avoiding credit card debt, rethinking small purchases, and boosting savings on a regular basis – young Canadians have taken the first steps to getting help with debt and living a more balanced life. Living below your means has big pay-offs down the road, as you keep working to achieve your savings goals.
Looking to live a more balanced life by living below your means? Join the conversation on social media by using the hashtag #BDOdebtrelief.