TLDR
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Making room in your budget for essentials, savings and a bit of fun can provide financial fulfillment and security
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Paying down your debt faster can free up money you’re otherwise spending on interest
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Setting financial goals can keep you motivated!
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Don’t try to keep up with what you see on social media – living within your means pays off big time
No matter what stage of life you’re in, talking about money is rarely easy. Students, newcomers, couples, retirees, parents and those starting over all face different money challenges, but there’s one thing that’s common – talking about them can make all the difference. RBC’s new video series “The Drive” aims to make these real-life conversations more approachable, bringing everyday Canadians together, to share in the dialogue.
In this episode, Jesse Jones drives through Guelph, Ontario with three passengers who talk through their goals, anxieties and experiences.
Starting your financial journey can feel like juggling flaming swords – student loans, rent, groceries, and oh, a little fun money if there’s anything left. Sound familiar?
Balancing your quest for financial independence with the realities of financial responsibilities isn’t easy, but it is doable. Here’s how to find balance as you’re starting out.
1. Make room for the things you need, and the things you want
Managing your money starts with making space for the essentials, a bit of fun and your future. There are a few ways you can do this. One common approach is the 50/30/20 rule, where:
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50% of your income goes to essentials – think debt repayment, rent, groceries
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30% goes to wants – a night out, new sneakers, a phone upgrade
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20% goes to savings – for both short-term and long-term goals
You may need to tweak this breakdown depending on your specific situation, but the key is to set some benchmarks so you can get the most out of the money you earn.
2. Make a plan for your debt repayment
Whether you owe money on student loans or are carrying a credit card balance, it’s important to have a plan for paying it down. After all, debt can get in the way of reaching your financial goals as the longer it hangs around, the more interest you end up paying – and that’s money you could use for other things! Here are some basics to keep in mind:
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Cover minimum payments first
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Focus on paying off high-interest debts (like credit cards)
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Once that’s handled, tackle lower-interest debts, like student loans
3. Take advantage of the gig economy
If making ends meet is a struggle, think about ways you can boost your income with a side hustle. Today’s gig economy has made this easier. Whether it’s as a ride share driver, tutor, dog walker, babysitter or freelancer, a bit of cash on the side can help bridge financial gaps. Just remember to balance your side hustle with self-care to avoid burnout.
4. Set financial goals
Goals can give you something to aim for, which can help you stay diligent with your savings. Paste them to your bathroom mirror if you need extra motivation!
5. Live within your means (don’t try to keep up with social media)
Has this happened to you? A friend-of-a-friend on Instagram posts about their new fancy car, while wearing a designer jacket and shoes you know cost a fortune. You think – how did they get so far ahead? I deserve designer clothes and a new car too!
It’s natural to feel a pang of envy when you see flashy posts, but remember, most people don’t post about their struggles. Living within your means provides a freedom that those living with long-term debt can’t enjoy. You’ll reduce financial stress, sleep better, and eventually have money to spend on the things that are truly important to you.
6. Use money hacks!
Keeping up with bills, loan repayments and savings can feel a little overwhelming. But automatic payments can make it all super easy.
You can set up automatic payments to a loan, credit card or savings account, where you simply set an amount, frequency and timeline and the money is withdrawn directly from your account – you don’t even have to think about it. You can also set up automatic bill payments with your cell phone or utility companies so you never miss a due date.
Here’s another hack: If your employer offers RRSP matching, sign up! This is essentially free money to grow your future.
7. Talk to someone
There’s a misconception that you need to have a chunk of money or lots of investments before you can talk to a financial advisor. That’s just not true. Think of a financial professional as your money coach – they’re here to help you create a plan and cheer you on. Remember, talking through your challenges is one of the best ways to come out on the other side of them.
Learn how to build good financial habits to reach your goals.
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.
