Last Updated on October 26, 2020 by Yetunde Akindele
The subject of financial education especially in regards to personal finance is one that most of us are not well versed in. In particular, there is so much we can gain in terms of savings, investing, and spending just by knowing the right financial tips. Canadians are lucky because so many opportunities exist to make for excellent financial health. Please read and I hope you enjoy reading these 18 Canadian personal finance tips, as much as I loved putting them together!
It is never advisable to buy a car brand new! A brand-new car depreciates by about 9% the moment you drive it out of the lot! This increases to about 19% in the first year (steep first-year drop) and about 60% after 5 years! Opt for a used car aged at 1 year or less. This way you save a huge amount of money. Used cars have better second-hand value than brand new cars! This is a fact!
Have an emergency fund. This is money you keep in a parking account, usually a high interest yielding savings account. You want to maximize your interest on your emergency fund! As a rule of thumb, this money must be easily accessible, hence it shouldn’t be money in any fixed investment account. Why? You need it for emergencies, perhaps a sudden need for a root canal extraction at the dentists!
Are you looking to buy a house? Get the lowest rates for a 15-year fixed mortgage and not a 30-year mortgage. Most people get 30-year fixed mortgages which are only beneficial in the short run. A 15-year fixed mortgage plan saves you huge amounts in the total cost of the loan you make in the long run.
Get Life insurance and start early! Dying is an occurrence that is unpredictable and definitely guaranteed to come to pass for all living beings! You want to secure the financial future of your beneficiaries! In your getting Life insurance, opt for whole life insurance rather than term insurance. Why? With whole life insurance, you get to pay steady premiums, increasing cash value which can serve as collateral for you to borrow against and an option to partake in the profits of the insurance company by way of investments! Additionally, get term insurance for your children!
Write your Last Will! Additionally, draw up your Living Will and Power of Attorney! I cannot overemphasize the unpredictability that life offers. Secure issues that will come up after your death. You would want to decide how your estate is shared as well as who takes guardianship of your children if they are minors. This is so crucial! Drawing up your Will is so easy, you can have a legally-binding comprehensive valid Will drawn up within a couple of minutes, even right now!
Make money online using freelance platforms! So many of them with global opportunities for employment! All you need is make yourself available and get an internet-enabled device. Take, for example, Fiverr the largest freelance marketplace in the world has reported that in 2019, they generated a whopping revenue of $150 billion! Other platforms to consider are Freelancer, Writers Work a freelance market place specifically for writers and Toptal, which is suitable for those who are business analyst, finance experts, project managers, and the likes.
Invest and grow your savings! Invest in Exchange-traded funds (ETFs) which give you a diversification of your investment portfolio. This is different from buying one single stock as you have with the stock exchange market. This way you spread your investment across various stocks ultimately limiting your risk. You don’t want to put all your eggs in one basket when investing! Additionally, you get to invest in no fee ETFs with most Robo-advisors.
Secure your future! Open a registered retirement savings plan account (RRSP). Avail yourself of the tax benefits. Hold investments such as Gold bars, ETFs, bonds, mutual funds, cash, etc in your RRSP to increase your interest earned!
You are responsible for shaping your children’s future. Guarantee their education by opening a registered education savings plan (RESP) for them as soon as possible! This provides a large part or possibly all of the money they will need to get a college or university degree in the future!
If you are wary of investing in stocks or ETFs, because of the intangibility perception. Yes, I know people who say they only want to invest in something they can physically hold! Invest in Gold and Silver bullion as well as other precious metals. Invest in them as bars, coins, or collectibles of your favorite Disney characters as an example. Your RRSP, LIRA, RESP, TFSA can all be held in this investment portfolio. Amazingly you can sell them easily too to recover the cash.
As cheesy as it sounds, you can start a blog to make money! Yes, blog like it is a business startup and never solely about passion. I have a wide variety of things I am passionate about, but that doesn’t necessarily make them a profitable blogging niche. Get a good web hosting platform to start your blogging. In Canada, I would advise you to use a Canadian web host provider as this offers benefits since the servers are hosted on Canadian land. You are guaranteed faster speed and better control over data by the Canadian government rather than other country’s governments.
Starting a business in Canada? Ensure to register your business name either as a sole proprietor or as a corporation. Whichever you choose is dependent on your business structure! Doing this helps you build better business credit!
If you own a business or are about to start one, build business credit. The benefits of this are so huge! You get access to larger loan limits at a lower interest rate. How sweet! Build good business credit by incorporating your business, on-time payments of vendors and suppliers, opening a business account, etc
Never ever mix your personal expenses with your business expenses. It is never a good idea to dip into your Business account. Get reliable and efficient accounting software to help organize your business cash flow and make filing your taxes easier at tax time.
As a new start-up, it is more advisable to outsource some Job functions. This way you save a lot of money by not having internal staff on a full-time salary. You pay only to get that particular job done and it could be for a fixed term. Big companies do it to save money, so why can’t you? Hire freelance top talents in web design, business analysis, developers, financial experts, project managers, and the likes.
Use your credit card for bill payments rather than cash. This allows you to build your credit rating which is a major deal-breaker in Canada! Never forget to pay your balance due. Do not pay the minimum $10 requirement as stipulated by most credit card issuing companies. Opt to pay in full or at the very least your statement balance. Regularly keep an eye on your credit score and credit report to detect any abnormalities.
Make use of money earning credit cards. Yes, you read right. Get credit cards that pay you cashback for spending. This way you make passive income from buying what you would have normally bought! There is a wide variety of Cashback credit card issuers in Canada.
Can’t afford a university degree, go to career colleges or trade schools. Most of these are more affordable and you might be eligible for loans and/or grants from the Canadian government with flexible repayment plans. History has shown that people who have post-secondary degrees are more likely to get jobs and the higher-paying ones at that!
Now, you have access to some of the best personal finance tips available to you as a Canadian. I welcome comments on your thoughts as well!