How to reduce financial stress on single parents
January 24, 2021
Using Credit Cards Without Falling Into Debt—A Guide
February 6, 2021
If there is anything that the Coronavirus has taught Canadians, it is the importance of being smart about money. The uncertainty that the pandemic has brought is hard to shake. With that, no one can tell for sure what the coming days, weeks, and months will bring, making it even more crucial that people be prepared for them.
As one of the most trusted debt consultants in Canada, here are five tips on how one can be money-smart in 2021:
1. Take Saving Seriously
According to this survey, two in every five indebted Canadians believe they will not be able to escape debt in their lifetime. As a result, many wonder how to get out of debt and have trouble paying bills and mortgages. It’s also not a surprise that not many people have savings.
However, now is the time to take saving money seriously. Financial experts often suggest the 50-30-20 approach when budgeting monthly income––50% goes to living expenses and debt payment, 30% is for entertainment, and 20% is for savings.
Of course, this can be tweaked to fit specific situations better. For instance, people who are deep in credit card debt might want to use the 30% to pay for debts instead of spending the money for recreation. If the 20% allotment for savings may be too high, starting smaller than that is still better than nothing.
2. Take Advantage of the Employer-Sponsored Retirement Savings Plan
Some employers offer group Registered Retirement Savings Plans, and this should be taken advantage of by their employees. Often, these RRSPs are limited to specific types of mutual funds and also include a matching contribution. As the total contribution includes a certain amount from the employer, it can be considered a bonus. That’s extra money that should not be missed!
3. Make Use of Budgeting Apps
The emergence of budgeting apps has made it easier for many people to keep track of their monthly spending and savings. In fact, according to a Canadian Financial Capability Survey in 2019, Canadians who depend on web-based budgeting tools are more likely to commit to their financial obligations and spend responsibly and within their means.
4. Regularly Review Bank Account and Credit Card Statements
Many people often throw away bank account statements or credit card reports or leave them unopened. However, there are several disadvantages to maintaining this habit. For one, duplicate charges, unauthorized purchases, and other errors may go unnoticed for long periods. This means that the account owner may end up paying for transactions that other people made. Additionally, not checking credit card reports at least twice a year makes a person vulnerable to identity theft crimes.
5. Work on Paying Off All Credit Cards
Anyone who uses credit cards and carries balances on them knows how wasteful it is to pay hundreds of dollars just on interest fees. Yet, there are several steps that can be done here. One might want to try the snowball method, which means paying off the smallest debt first and paying the minimums on other debts to lessen the number of obligations one at a time. Another option is the avalanche method, which involves paying off the debt with the highest interest while still paying minimums on other debts. The goal of this one is to save the biggest possible amount on interest rates.
Additionally, a credit card balance transfer could be considered to reduce debt. When the interest rate is lower, credit card debts could be paid off faster!
Conclusion
At the beginning of every year, people typically make a promise to be smarter about their finances. However, without a concrete plan and the determination to commit to it, that promise might not come to fruition. For this reason, be sure to take the tips discussed above to heart and witness the positive financial changes it offers!
For people who are having trouble managing debt and saving money, DebtHelpers.ca is here to help. Debt Helpers is an established company that offers a range of services to solve people’s financial problems – reach out today and start achieving financial freedom!