4 TIPS FOR FINANCIAL AWARENESS
Tomila Sahbaei | August 2nd 2021 | 5 min read
This week’s blog post was written in celebration of the upcoming holiday, financial awareness day! Financial awareness day is set on August 14th and brings awareness to the importance of creating financial practises that will set you up for a comfortable future. In this blog post we will lay out 4 tips that you can put into practice to develop your own financial awareness!
Make a Budget
Someone has probably told you to make a budget at some point in your life before, but that is because it really is the golden rule when it comes to financial awareness. Having a budget will keep you accountable and over time, you will become more aware of your spending habits. There are a lot of different techniques you can use to make a budget. Some people decide to move part of their pay cheque into a savings account, only using the remainder of the money for monthly spendings. Others will create a spreadsheet, calculating how much money needs to go into rent, transportation and other expenses. In fact, both Google Sheets and Excel offer free budgeting templates. A quick Google search will show you the various options. In the end, how you decide to design your budget will depend on what works best for you and your expenses. Either way, having a budget of any kind will help you.
Open a TFSA
If you’re eighteen or older, and you are a resident in Canada, you can go to your bank and ask to open a tax-free savings account, also known as a TFSA. When your money is in a TFSA, all the earnings you make on it will not be taxed and can be taken out of your account tax-free. Once you put your money into a TFSA, from there you can decide to invest it in something. There are a lot of options for investment. You can choose to invest in government bonds, mutual funds, securities, et cetera. But even if you choose not to invest in anything, the other benefit that comes from keeping your money in a TFSA is that it is outside of your regular banking account. This will prevent you from spending your savings, and when you are ready to take a large amount out, you will be able to do so.
Open an RRSP
RRSP stands for registered retirement savings plan. You can open one when you’re eighteen in Canada – just like the TFSA. And like a TFSA, putting your money into an RRSP will save you tax money. Whatever money you decide to put into an RRSP will be deducted from your taxable income. For example, if you pay 40% in taxes, every 100 dollars you put into your RRSP saves you 40 dollars that would otherwise be taxed. Then, you keep your money in there until you decide to return. You will have to pay taxes on the money then, but the tax rate will be lower than what you would pay on the money now.
Use Cash, Not Card
We know, we know, cash is old school! Why go through the trouble of going all the way to the bank to leave with an envelope of money when you could easily pay with a tap from your phone? Well, the benefit of using cash is that you can physically see the amount of money you are spending. This can help prevent you from making impulse purchases, which will save you money in the long run. The other benefit is that you will not have to worry about any interest fees. If you do not pay your credit card bill on time, you will have to pay an interest fee on the amount you spent. If your debit card is on a student plan, you will only have a limited number of transactions per month as well. But there is no limit on how many transactions you can make on cash. You can also easily set a spendings limit on yourself by only taking out the amount of cash you want to spend for the week, month, et cetera. This tip may seem odd in today’s digitalized world, but it can help you save money, which will help secure your financial future.
Overall, this blog post laid out 4 tips for financial success. These tips are meant to be adapted to best fit your own lifestyle and personal financial goals. Before making any huge financial decisions, you should also want to consider speaking with your bank and/or your family.