[et_pb_section fb_built=”1″ _builder_version=”4.22.0″ top_divider_style=”ramp2″ top_divider_color=”#E7DFF3″ top_divider_height_tablet=”” top_divider_height_phone=”” top_divider_height_last_edited=”on|phone” bottom_divider_style=”curve2″ bottom_divider_color=”#5B25AF” bottom_divider_height_tablet=”80px” bottom_divider_height_phone=”50px” bottom_divider_height_last_edited=”on|phone” da_disable_devices=”off|off|off” global_colors_info=”{}” theme_builder_area=”post_content” da_is_popup=”off” da_exit_intent=”off” da_has_close=”on” da_alt_close=”off” da_dark_close=”off” da_not_modal=”on” da_is_singular=”off” da_with_loader=”off” da_has_shadow=”on”][et_pb_row _builder_version=”4.22.0″ background_size=”initial” background_position=”top_left” background_repeat=”repeat” custom_padding=”||||false|false” global_colors_info=”{}” theme_builder_area=”post_content”][et_pb_column type=”4_4″ _builder_version=”4.16″ custom_padding=”|||” global_colors_info=”{}” custom_padding__hover=”|||” theme_builder_area=”post_content”][et_pb_text _builder_version=”4.23.4″ background_size=”initial” background_position=”top_left” background_repeat=”repeat” custom_padding=”||0px|||” global_colors_info=”{}” theme_builder_area=”post_content”]<\/p>\n
By Carmen Chan<\/em><\/p>\n Did you know that how you manage money in your 20s \u2013 from what you do with your first taste of a steady income and salary to how quickly you pay off your debts \u2013 your habits will shape your financial future for decades to come?<\/p>\n With tuition, textbooks, rent, groceries, and fun money, whether you\u2019re paving your way through higher education or you\u2019ve just joined the workforce with hefty student loans on your mind, finding your financial footing in your 20s isn\u2019t easy.<\/p>\n The average Canadian\u2019s credit card balance in the first half of 2024<\/a> was $4,681, with each person\u2019s overall consumer debt, excluding mortgages, at $21,910 by the third quarter of 2024<\/a>. A large part of this overall debt amount is made up of personal loans and credit card debt.<\/p>\n If you\u2019re a Gen Zer paying your dues at school or in the first steps of your career, now\u2019s the time to get a handle on your finances. Here\u2019s a look at the key steps you should take in your twenties to conquer your debts and boost your savings.<\/p>\n Budgeting Tips for New Grads During Uncertain Times<\/span><\/span><\/a><\/p>\n [\/et_pb_text][\/et_pb_column][\/et_pb_row][et_pb_row column_structure=”1_2,1_2″ make_equal=”on” custom_padding_last_edited=”off|tablet” _builder_version=”4.22.0″ width_tablet=”80%” width_phone=”80%” width_last_edited=”on|phone” custom_margin=”||||false|false” custom_margin_tablet=”||-35px||false|false” custom_margin_phone=”||-35px||false|false” custom_margin_last_edited=”on|phone” custom_padding=”||||false|false” custom_padding_tablet=”||0px||false|false” locked=”off” global_colors_info=”{}” theme_builder_area=”post_content”][et_pb_column type=”1_2″ _builder_version=”4.16″ global_colors_info=”{}” theme_builder_area=”post_content”][et_pb_text _builder_version=”4.23.4″ custom_margin_tablet=”45px||||false|false” custom_margin_phone=”45px||||false|false” custom_margin_last_edited=”on|phone” global_colors_info=”{}” theme_builder_area=”post_content”]<\/p>\n Your 20s are a pivotal moment to build a solid credit history<\/a>. You\u2019re starting with a blank slate to make a great first impression to lenders when it\u2019s time to apply for a loan or mortgage down the road. Showing them that you can keep up with payments for the long haul could save you thousands of dollars in interest.<\/p>\n How do you do this? Don\u2019t be late on making payments to your debts. At this point, they shouldn\u2019t be more than your student loan repayments, your phone bill, and a small amount on your credit card. Circle due dates on your calendar or set up direct debits to stay on track.<\/p>\n ADHD Money Management: 5 Ways to Work With Your Brain, Not Against It<\/span><\/span><\/a><\/p>\n [\/et_pb_text][\/et_pb_column][et_pb_column type=”1_2″ _builder_version=”4.16″ animation_style=”slide” animation_direction=”left” animation_intensity_slide=”2%” custom_css_main_element=”margin: auto;\t” global_colors_info=”{}” theme_builder_area=”post_content”][et_pb_image src=”https:\/\/nomoredebts.org\/wp-content\/uploads\/2024\/01\/bill-payment-reminders-on-phone-screen-800px.jpg” alt=”A smartphone screen showing scheduled bill payment reminders.” url=”https:\/\/nomoredebts.org\/wp-content\/uploads\/2024\/01\/bill-payment-reminders-on-phone-screen-800px.jpg” url_new_window=”on” align=”center” _builder_version=”4.23.4″ max_width_last_edited=”off|desktop” max_height_tablet=”none” max_height_phone=”none” max_height_last_edited=”on|phone” custom_padding_tablet=”||50px||false|false” custom_padding_phone=”||50px||false|false” custom_padding_last_edited=”on|phone” animation_style=”slide” animation_direction=”right” animation_duration=”2000ms” animation_intensity_slide=”5%” border_radii=”off|200px|20px|200px|20px” box_shadow_style=”preset2″ global_colors_info=”{}” theme_builder_area=”post_content”][\/et_pb_image][\/et_pb_column][\/et_pb_row][et_pb_row _builder_version=”4.22.0″ background_size=”initial” background_position=”top_left” background_repeat=”repeat” custom_padding=”||||false|false” global_colors_info=”{}” theme_builder_area=”post_content”][et_pb_column type=”4_4″ _builder_version=”4.16″ custom_padding=”|||” global_colors_info=”{}” custom_padding__hover=”|||” theme_builder_area=”post_content”][et_pb_text _builder_version=”4.24.2″ header_3_font_size=”26px” background_size=”initial” background_position=”top_left” background_repeat=”repeat” global_colors_info=”{}” theme_builder_area=”post_content”]<\/p>\n Did you know almost half of Canada\u2019s post-secondary students take on student loan debt? And then pay for additional, nice-to-have lifestyle expenses on their credit cards?<\/p>\n Tackle your debts by getting a job \u2013 this could be a part-time job, working a handful of hours each week around your school schedule, taking a job on campus, or you may decide to spend your summer months working a full-time job. You\u2019ll have extra cash flow to pay debts and to help with your day-to-day expenses.<\/p>\n While it might be hard to chip away at your student loan debts during your studies, working will help keep your debts and student loans as small as possible<\/a>. The idea is to leave school with as little debt as possible.<\/p>\n You can also work smart by researching scholarships, bursaries, and other awards available to you. Non-repayable funding, like grants, bursaries, and scholarships, are a great way to offset expenses tied to your education.<\/p>\n How to Pay for College or University Without Getting Into Major Debt<\/a><\/p>\n Your 20s are a time to learn to live within your means. Most young adults don\u2019t have the pressure of paying for mortgages and daycare expenses, but you may be tempted by brand new condo rentals, flashy cars, new electronics, and luxury trips.<\/p>\n Get into the habit of budgeting<\/a>. What is your monthly income and what are your typical monthly expenses? For a month, track your daily expenses, including your trips to the pub, your groceries, and your online shopping. You may learn you\u2019re spending over $200 a month on discretionary expenses \u2013 or \u201cwants\u201d instead of \u201cneeds\u201d \u2013 like your morning coffee runs or meal deliveries.<\/p>\n What Are Your Bad Habits Really Costing You?<\/a><\/p>\n Create a budget by writing down your monthly income and your fixed expenses, including your rent, bills, and transportation costs. Then, attribute some of your income towards your discretionary spending, such as eating out, entertainment, and shopping. You need to also carve out some of your income to put towards savings and debt payments.<\/p>\n Your budget should balance so that your income is enough to cover your fixed costs, debt payments, discretionary purchases, and the money you\u2019re putting into savings. Test out your budget to make sure it fits into your lifestyle.<\/p>\n You may need to cut costs to balance your budget. That could mean getting roommates to split the rent, picking up more hours at work, or selling your car to take the bus to work.<\/p>\n How to Break the Paycheque to Paycheque Cycle<\/span><\/span><\/a><\/p>\n Saving money can be tricky in your 20s when you have so many competing priorities. Your first pot of savings should be dedicated to an emergency savings fund, a small but invaluable bit of money you can turn to when you\u2019re in a pinch. Typically, your emergency savings should cover three to six months of living expenses.<\/p>\n This may be a big sum to save up, so start small. Begin with an attainable goal of $500 to $1,000 and attribute about 10 percent of your income each month towards your rainy day fund. To simplify the process, automate your savings so the cash is moved over each time you get paid. You can do this through your online banking with a recurring transfer.<\/p>\n Don\u2019t be discouraged when you need to pull cash from this fund. Whether you\u2019re in between jobs, your car breaks down, or you need to take a summer school course, your savings are used for these emergency situations.<\/p>\n Avoid an Unexpected Financial Crisis and What to Do If Disaster Strikes<\/a><\/p>\n It sounds unrealistic to think about retirement when you\u2019re just getting started with your career, but there\u2019s power in compound interest. Sock away as much as you can \u2013 as little as $10 to $20 a month into your retirement fund yielding a high interest rate and watch that pot of money grow as interest accumulates. The longer your money is invested, the more time it has to compound and grow.<\/p>\n If you\u2019re working full-time, it\u2019s worth looking into your company-provided retirement savings plan. Many companies will match your contribution to a certain percentage, so it\u2019s worth taking advantage of that benefit. For example, if they have a matching plan of 4 percent, they will add 4 percent to the 4 percent you put into your retirement savings. That\u2019s essentially getting a 100 percent return on your investment, before you start earning any interest. Don\u2019t miss out if your employer offers this!<\/p>\n Paying Down Debt Is a Bigger Deal Than You Might Think!<\/a><\/p>\n In an era of Instagram influencers and instant gratification, Canadians in their 20s are inundated with the newest fashion, high end real estate, and trendy restaurants. Try not to get swept up in things you can\u2019t afford \u2013 and the habit of turning to debt to get your hands on them. Using credit cards and lines of credit is a dangerous game to play in your 20s because you could be setting yourself up for a lifetime of debt repayments, a low credit score, or worse. Decide on why you\u2019re scrimping and saving<\/a>: is it to pay off student loans<\/a> a year after graduation, to have a down payment for a home by 25 or to travel the world during a gap year? Figure out what your inspiration is and it\u2019ll keep you focused.<\/p>\nStay on Top of Your Debts to Build Up Credit History<\/h2>\n
<\/h2>\n
Get to Work \u2013 As Much as You Can<\/h2>\n
Budget \u2013 And Don\u2019t Get Into More Debt<\/h2>\n
Build Up an Emergency Savings Fund \u2013 And Then Some<\/h2>\n
Save for Retirement<\/h2>\n
Have Patience and Stay Focused<\/h2>\n
Remember, your 20s are for ramen noodles and roommates \u2013 and that\u2019s not a bad thing! As your income increases, don\u2019t fall into the trap of lifestyle inflation, using your extra cash flow and bonuses to upgrade your lifestyle.<\/p>\n