Let’s go, Canada. We understand. As a Canadian, we talk about a lot of tools and personal finance works that may or may not apply to you. But now, Canadians, it’s time to clean up your finances. No, we’re not talking about investing your money.
(Yes, we’ve heard you can do that in Canada, and we’re envious.) We mean it’s time to deal with it. Before you become too overwhelmed by money, realize that there are a few basic, proactive activities you can do by the end of the day. This does not guarantee that you will be debt-free tomorrow, but it does indicate that you are taking the necessary measures.
We have faith in our northern counterparts, so let’s get started.
1. Take a Peep at Your Credit Score for Free
Ah, yes. Checking your credit score is one of those tasks you’ve been putting off. We get it. That three-digit number can be super intimidating. If you need, whisk up a glass of moose milk. Take a big sip. Now, check your credit score for free through Borrowell.
Not only will you receive your credit score, but you’ll also be able to study your credit report so you can see exactly which accounts you owe money on. Pro tip: Make sure everything’s accurate! Credit bureaus make mistakes; after all, look at how many folks they’re reporting. The borrower also offers customized tips to help you take active steps to improve your score.
2. Draw up a Budget
An integral part of managing your money is creating a budget. Ew, gross. We know. But it’s important to take a good look at what you’re spending and where.
If you’re not sure where to even start, we favour the 50/20/30 budgeting method for its simplicity. Here’s how it works
- 50% of your income goes toward essentials.
- 20% goes toward financial goals.
- 30% goes for personal spending.
The key is to accept you can’t create the perfect budget in an hour. You’ll have to experiment to find what works best for you.
3. Map out Your Debts
After you check your credit report and sketch out a budget, you’ll be able to see where you owe money. Go ahead and incorporate these debt repayments into your budget and hash out a plan in as little as 13 minutes. It’s important to take care of your debt before it spirals into never-ending fees and interest rates.
4. Set up a Stream of Passive Income
Unfortunately, “passive income” doesn’t mean you can sit back and embrace the lazy. You’re going to have to work a little at first. If you’re a good host with a desirable space, you could add hundreds — even thousands — of dollars to your savings account with Airbnb.
And there’s no reason you can’t be creative. We found a guy who earns $1,380 a month renting out a backyard tent on Airbnb. Taking a few simple steps can make the difference between a great experience and a less-than-satisfactory one.
Here are a few tips:
- Make your space available during high-demand times in your area. Think concerts, conventions and sporting events.
- Be a good host, and make sure your place is stocked with the toiletries you’d expect at a hotel — toilet paper, soap, and towels.
- Be personable. A lot of travellers turn to Airbnb for the personal touch they won’t find at commercial properties.
(Hosting laws vary from city to city. Please understand the rules and regulations applicable to your city and listing.)
5. Find a Flexible Source of Extra Income
If you need a more immediate source of income, consider searching for a flexible work-from-home job. We put together a list of eight job-search websites that can help you find the perfect work-from-home opportunity in Canada.
6. Start Building an Emergency Fund
Once you’re feeling more stable, focus on building an emergency (or rainy day) fund. One of the best ways to do this is to trick yourself into saving. You can set your finances on autopilot by having a portion of your paycheck automatically deposited into your savings account or by setting up an automated investing app, like Mylo.
It’s similar to the Acorns and Stash apps we use in the U.S. — you can opt-in to round up your purchases to the nearest dollar. The remaining change will go into ETF investments. You just might be surprised by how quickly the change stacks up!
7. Dig up Extra Money
OK, we don’t mean go out to Prince Edward Island and start digging. We mean take a good hard look at your spending and see where you can find some savings. This might mean negotiating your rent, cutting the cord or finding a discount cell phone carrier WhistleOut can help you compare those. The process will become easier when you map out a budget. We’ve found all those cringe-worthy expenses bubble up when you’re forced to face them.
8. Think About Retirement
Your final stop today is to study up on retirement — even if you’re 20 years old. The earlier you strike up a retirement savings account, the better. Start by figuring out just how much you should be saving each month. The Financial Consumer Agency of Canada has some great resources for retirement planning.
Then, look into different types of investments — like stocks, mutual funds, and savings bonds. The FCA has your back there, too. Do you make it to the bottom of your moose milk? Don’t worry. You’ve got this. Just remember to take it day by day, penny by penny. We’ve got faith in ya, Canada!