Canada has plenty of people who will never have to worry about money but according to market research company Ipsos, 48% of Canadians are only $200 or less a month away from financial ruin. There are many varied reasons for this, of course, but not being wise with your money is definitely a factor if you can’t make ends meet. So how do you wise up financially? Here are some of the biggest financial mistakes Canadians make and how to come back from them.
Not having a financial plan
Before you book your appointment, here are 20 financial terms most Canadians don't know (but should).
Living beyond your means
Not having any savings
Not tracking your spending
A good place to start is to go over your bank and credit card statements every month (and try to use the best credit cards in Canada). Then get a free budgeting app to help you keep track of your spending.
Not paying yourself first
Work out how much you’ll have left over once you’ve paid the bills and the necessities. Then decide on an amount you can afford to set aside each month and set up an automatic transfer for this amount into a savings account or one of the best mutual funds in Canada. If it’s done automatically, you won’t be tempted to spend that money on other things instead and you’ll quickly build up some savings.
Living in a home you can’t afford
If you’re considering buying a home, add about 40% to your current rental payment to get an idea of what a similar home will cost if you own it. If that’s more than you can afford but you still want to invest in property, consider something cheaper.
RELATED: How to get the best mortgage rate in Ontario.
Only paying the minimum on your credit card
Using credit cards rather than cash
The solution is to use your credit cards only when it makes more financial sense to do so, such as when the best travel credit cards in Canada throw in free travel insurance for that trip you’re about to take. As for the rest of your purchases, stick to cash payments only.
Not having the right insurance
Not making your taxes work for you
Not taking advantage of these is essentially free money you’re missing out on and it’s a huge financial mistake to make. Discuss with a financial advisor which benefits you’re eligible for and how you can make your taxes work for you.