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There’s no question these are financially stressful times for Canadians: According to a recent survey by Financial Planning Canada, money is the top source of stress for more than a third of Canadians. One in three Canadians says financial stress has led to anxiety, depression or mental health challenges, with many people still reeling from the effects of the pandemic and the rising cost of living.
But the good news is that many individuals are taking action to get a better handle on their finances. And while this may seem like a daunting task, there are several easy steps you can take to help reduce financial stress.
Here are 10 tips to get you started:
1. Understand your spending habits
Before you even begin to reduce your spending, set aside savings or adopt any smart, money-saving tips, one of the most important ways to reduce financial stress is to better understand the source of this stress. Set aside some time to work out how and where your money is coming from and where, when and on what it’s being spent. Developing this understanding of your personal finances is crucial, no matter what your financial status is. It will also help you make more informed financial decisions both now and in the future.
2. Create a budget
As with many financial tasks, once you have a solid understanding of your spending habits, you can create a budget that aligns with your monthly earnings. Try using a budgeting app, such as the RBC Nomi app, a spreadsheet, or a pen and paper. Organize your spending into key categories such as transportation, rent, bills and eating out. Then, set a realistic and achievable spending limit that you can maintain. Of course, life happens, and there will be times when you need to extend your limits — which is why it’s worth building an emergency fund.
3. Build an emergency fund, however small
Having money set aside for an emergency — such as home repairs, medical bills or unexpected travel — can make a big difference in alleviating financial stress and anxiety. While the size of your emergency fund will depend on your income and your ability to contribute, the important thing is to consistently set any amount of money aside for emergencies and unexpected expenses. One quick and easy way to do this is to transfer money from your chequing to your savings account or round up transactions on your debit card and set aside the balance in a savings account.
4. Chip away at debt
Consolidating your debt may be a smart move that saves you time and money. For example, if you have balances on multiple credit cards or loans, you could save on interest costs by switching and consolidating your balances to a single RBC line of credit or loan at a lower interest rate. You can also try the Debt Reduction Planner to help you chip away at your debt and alleviate the stress of seeing red.
5. Stay on top of subscriptions
It’s never been easier or more tempting to sign up to subscription services. From TV and music streaming to grocery delivery, coffee pods and vitamins — brands and businesses are happy to help you subscribe. But subscriptions can really add up — and with direct debit payments, it may be hard to reduce your spending when you need to. To save money, start by tallying up all your subscription fees. Consider the essentials, calculate if it’s really worth the money, and cancel or pause whatever you don’t use.
6. Shop around for utility providers
You may be spending more than necessary on utilities like heating, electricity, or your mobile phone. But it can also be overwhelming and time-consuming to review all your options from various utility providers. One way to save time and money is by using online cost comparison tools to get the best rates for your unique circumstances.
7. Consider a side hustle
Freelancing can be an attractive option because of the flexibility and independence it offers, as well as providing an additional source of income — whether it’s through a creative pursuit, delivery driving, care services or maintenance work. Online platforms are a good way to find a side hustle in the gig economy, and getting started can be pretty simple. If you do decide to go this route, here are some ways to protect yourself in the freelance economy.
8. Talk to a financial advisor
Financial advisers can provide valuable support to people experiencing financial stress by offering guidance, knowledge and practical solutions. They can help you develop a personalized financial plan that is unique to you while also offering education, advice and resources. If you feel overwhelmed by money matters, a financial advisor may be a much-needed source of emotional support and guidance.
9. Maintain your physical and mental well-being
Depression and anxiety are common side effects of financial stress, so it’s important to maintain your physical and mental well-being. Simple things like going for a walk, seeing friends and family, and eating a healthy meal can help lift your spirits and make you feel more able to take control of your money.
10. Talk about it
Talking about money can feel awkward and uncomfortable, but it doesn’t have to be. In fact, talking about finances, including financial stress, might make you less vulnerable to mishaps. Check out these 5 tips to help you find the right people, the right time, and the right strategies to take control of your money.
Click here to learn more about MyAdvisor, a free digital advice platform available exclusively to RBC clients.
This article is intended as general information only and is not to be relied upon as constituting legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. Information presented is believed to be factual and up-to-date but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or any of its affiliates.