12 Personal Finance Tips (From a Completely Unqualified Source!)

Am I a personal finance expert? Absolutely not.

Am I an accountant or financial advisor? Nope. Do I have to do math or deal with money at all in my daily life? Very rarely.

So why am I writing a blog post all about personal finances? Good question!

Even though I’m not qualified at all to give out any financial advice, I’ve become a lot more interested in personal finance this year and wanted to share some things I’ve learned along the way. So many times I thought to myself, “Why didn’t I know this?” or “Why wasn’t I doing this years ago?” and I’d love to help you come to those realizations so much sooner than I did.

I also wanted to share that you do not have to be an expert to make moves in your personal finances. I think so many people hold off on investing or even learning more about their money because they don’t have the education. While it’s absurd that our public school system doesn’t take the time to teach us about budgeting, taxes or investing for retirement, we also don’t need to wait until we learn everything before we get started.

There are simple things you can learn quickly to make big moves in your finances now. Your biggest asset is time, not knowledge.

And so with the huge disclaimer that I am not even remotely qualified and that none of the following should be construed as advice for your personal situation, let’s dive into my 12 personal finance tips and takeaways!

1. Check your privilege

I think every post about personal finance needs to start with a very important reminder: Check your privilege. Becoming wealthy is not as simple as spending less money for most of the people in the world. People who are living paycheque to paycheque, who grew up below the poverty line and who have massive amounts of debt are not able to follow some of the advice we often hear about paying yourself first or building up your credit.

Poverty is not a personal failing – it’s a societal one. I think it’s very ignorant to give blanket personal finance advice and assume that a little bit of hard work will make everyone wealthy. A lot of people are working very hard – harder than the wealthy – and are still poor.

As for me, I want to acknowledge my own privileges and accept that because of these privileges (and more I’m not even aware of) my tips below will not be relevant to every situation. I grew up middle class and was lucky enough to have help paying for university and paying off my student loans. My partner and I had help making a down payment on our home and were lucky enough to sell it for a small profit. I’m very fortunate to be debt-free and employed.

2. Start an emergency fund

An emergency fund is just that: money for emergencies. The idea is that you create a fund that you can set aside so if/when any emergencies occur, you already have the money and don’t have to do anything drastic (like take out a high-interest loan).

Having an emergency fund gives you peace of mind. You know you’re not going to be financially ruined if you lose your job or your pet needs surgery. Most money experts recommend setting up an emergency fund as one of the first things you do when taking charge of your financial situation – even before paying off debt – since an emergency would just put you further in debt.

But what constitutes an emergency? And how much should you have in your emergency fund? Every person will have a different answer to those questions depending on their lifestyle and comfort level. Some people keep a small emergency fund, knowing they have a stable job and other options if emergency expenses run high, like a line of credit or personal loan from a family member. Others prefer to keep a larger emergency fund – often enough to cover 6+ months of expenses – should they lose their job and need some time to find a new one.

You want to keep your emergency fund as liquid as possible. This is not money you should be investing and tying up in stocks or real estate. You want to be able to access this money quickly in an emergency and know you can count on the amount that’s there, rather than risking it in the stock market. I’ve learned the best place to keep your emergency fund is in a high interest/yield savings account at an online bank. These are like the typical savings accounts you’d find at a traditional bank, only they give you way higher interest.

We currently have our emergency fund in a high interest savings account at EQ Bank with an interest rate of 1.25%. Compare that to the regular interest rate on a savings account at TD Bank (0.02%) or CIBC (0.05%), and you can see why the switch to EQ was the right call.

PS: EQ Bank is CDIC insured, so it’s a legit option for Canadians!

3. Know your goals and your numbers

Personal finance doesn’t have to be scary. A lot of people avoid getting into their finances because they don’t want to know what their numbers actually are. But even if your numbers aren’t where you want them to be, it’s so much more empowering to know what they are so you can plan your next steps.

Don’t be afraid of your numbers! Dive in and find out: What’s in the bank? What do you owe? What do you make? You can’t make any financial moves if you don’t know your exact financial situation. So take the time to find out what your numbers are, even if you’re nervous to face the music.

Now comes the fun part: What are your money goals? Personal finance shouldn’t be about sacrificing just for the sake of saving money. What do you actually want to do with that money? Create a specific goal, put a dollar value on it, and work towards that. It’s so much more enjoyable (and attainable) to say you’re working to save $10,000 for a dream trip in two years than it is to just “save money.”

For us, our big goals are retirement and extended travel. We have separate accounts for both of these goals and love watching them grow as we work towards them.

4. Have a plan for your debt

Of course, it’s not all rainbows and butterflies when it comes to personal finance. There’s also debt to consider. If you have debt, you’re in good company – apparently 80% of Americans have debt. Debt can be anything from student loans and mortgages to credit card debt or medical debt.

Broadly, some debt is better than others. Student loans and mortgages generally have lower interest rates, and provide something of extreme value (an education and housing) that you can leverage (getting a good-paying job and selling your house). Consumer debt, like credit card debt or car loans, are often considered “bad debt” as they have high interest rates and less/depreciating value.

There are generally two methods for paying off debt: snowball or avalanche. The snowball method is where you pay off your smallest debt first, so you can get a quick win and build up momentum to keep paying off debt. The avalanche method says to pay off your largest debt with the highest interest first, which makes sense financially, but may take a while.

Whether you go snowball or avalanche, I think the important thing is to have a plan. Learn how much you owe and decide which method you want to pursue. Come up with a strategy for how you’ll put extra money towards your debt (cut back on spending/expenses or start a side hustle) or minimize your debt (consolidate or debt forgiveness). Figure out how much you can pay each month and what your timeline is for paying it off.

It’s also important to have a plan to ensure you won’t get back into debt. So many people make huge sacrifices to pay off their debt, and then find themselves right back in debt a few years later. It’s not enough to tackle the debt; you also need to tackle the underlying issue that got you into debt in the first place. Of course, this is easier to tackle if your issue is a bad shopping habit rather than debt due to medical bills or basic living expenses.

5. Time in the market, not timing the market

As well as having a plan for your debt, you also want to have a plan for your investing. I know investing can sound super scary but it doesn’t have to be. You don’t have to be an expert to make your money work for you.

If you want to get into the stock market, get in right away. The amount of time you spend in the market is way more important than trying to time the market perfectly. Every day you wait is wasted opportunity. Because the truth is it’s very difficult to time the market perfectly. Very few people do it successfully. What usually happens is you miss the perfect moment and end up spending more time on the sidelines when you could have already been in the game.

If you’re planning to be in the market for the long haul, timing doesn’t matter. Sure, the person who bought into Gamestop right before their stock went through the roof probably did very well. But if you’re both still Gamestop owners 20 years from now, that one blip will not have mattered.

Don’t try to time the market. Don’t worry about picking the perfect stocks at the perfect time. Don’t wait on the sidelines trying to learn everything you can before you make a move. Just get in. Time is your greatest asset so the earlier you can start that compound interest, the better.

6. You can invest irregularly

I really wish someone had sat me down and explained this to me at 18. I used to think that if I couldn’t afford to put $10 or $5 or even $2/day into an investment account, then I just shouldn’t bother. But that was so incorrect. I didn’t need to commit to a regular amount – I could have invested irregularly.

So many money experts will say you should pay yourself first and set up an automatic amount to go into your savings/investment accounts every month. They even tell you it’s okay if it’s just a small amount, like $50. But for an 18 year old with student loans who was still applying for part time jobs, even $50 seemed like too much. I couldn’t commit to having an extra $50 every single month and so I just didn’t bother.

Here’s what I would say to 18 year old me now, “Don’t have $50 a month? No problem! You don’t have to set up an automatic monthly payment. But you should throw something into an account now because compound interest is powerful, especially when you’re young. Don’t worry about committing to a regular amount. Just throw in money anytime you have it.”

You don’t have to contribute regularly to your investment accounts. Should you? Sure, if you can afford it. But if the alternative is not opening an account at all, forget about monthly payments! Just throw in money whenever you can. Have extra birthday money? Chuck it in there. Got a bonus at work? Invest it. Managed to cut down on your expenses this month? Awesome, add that to your investment account.

Of course, you eventually want to get to a place where you are contributing a larger amount on a regular basis. And I understand that by making that an automatic deposit as soon as you get paid, you don’t have to think about it or risk spending it. But that’s not realistic advice for many people who are just starting out.

PS: If you invest just $100 at 18 years old and never add another penny, you’ll have about $10,000 in retirement (assuming a 10% annual interest rate). If you waited to invest that $100 until you were 30 years old, it’d only be about $3000 in retirement. Time is your greatest asset!

7. Use a credit card, if you can pay it off

Credit cards are controversial. Some people can get in trouble with credit cards, racking up balances they can’t afford and getting stuck with high interest payments. Luckily, I was taught to never put more on my credit card than I have in the bank and to pay my card off right away. Because of that (and the privilege of always having enough in the bank to pay off the card), I have a very responsible relationship with credit cards.

We pay off our credit cards every few days. I know some money experts have a strategy for the perfect time you’re meant to pay off your card in order to stay under a certain credit limit. But the bottom line is you need to pay off your credit card balance before interest accrues. The way I ensure that never happens is by logging into my online bank account every few days and paying off any balance.

When you treat your credit card more like a debit card (where you have to have the money in the bank to use it) and pay it off regularly, you can then use your credit card as a tool. By increasing your limit, you’re able to build up credit. And you can also take advantage of perks like points, miles, rebates and more.

There is so much more you can learn about using a credit card to increase your credit score, how to hack your spending to get the most points, which cards offer the best perks, etc. But all I want you to know is that you don’t have to be afraid of using credit cards as long as you have a responsible relationship with them. I know that’s easier said than done but the perks and ability to build your credit score are worth it!

8. Talk about money with your partner regularly

This is one of the most important money lessons I’ve ever learned and I am so glad it’s one I learned early. Colin and I had our first money meeting way back in 2017 when we first moved in together and bought our condo. I go into more details about how we manage money in this post, but my big tips are:

• Start by talking about your financial history. How was money handled in your household? Was money talked about when you were growing up? Are you a saver or a spender? Have these conversations before you dive into the numbers so you can understand where you’re both coming from.
• Share your numbers. Get transparent about your income, you debt and your spending. This can be a very vulnerable exercise but I think it’s so important, especially if you’re in a long term relationship. It’s wild how many people have no clue how much their spouse earns or owes!
• Decide how you will split things. Some couples like to combine all their finances, some keep it all separate and some do a combination of the two. There’s no one right answer – just whatever works for you two. Even if you are keeping some or all accounts separate, I think it’s still important to be transparent about your numbers. And, in some places, being legally married means your money is joint anyway, regardless of whose name is on the account.
• Create shared goals. Talking about money with your partner shouldn’t be about shaming them for their spending habits or feeling bad about how much you owe. The ultimate goal should be your future: What do you want to do with your money? Have fun brainstorming different things you could do with your money and make that the focus of your conversations. It’s a lot more fun to cut back on take-out when you know you’re saving up for a family vacation.
• Schedule a regular money meeting. This conversation about personal finances shouldn’t be a one-and-done thing; it should be a regular conversation you have with your partner. You want to be able to check in regularly and reevaluate your goals and finances as life changes. So put it on the calendar. By scheduling this money meeting ahead of time, one of you doesn’t have to be the “bad guy” who is forcing the other to talk about money. We like to do ours at the end of every month.

9. Track your income and your spending

A huge part of knowing your numbers is actually tracking your income and your spending. This is something Colin and I do as part of our monthly money meetings. It’s important to know what is coming in and what’s going out. For us, we like to track everything on a spreadsheet. We track our employment income, any other money that comes in (like gifts), fixed expenses (like rent), our investments, and big purchases.

Could we do a better job of this? Absolutely. We only track our big purchases and not our day to day spending, which sometimes makes it tricky to know how we’re doing. It’s something we want to get better at, especially if our expenses increase in the future and we need to be more aware of our daily spending. Luckily, there are lots of apps that track your spending and can help you stay on budget.

I actually find it really fun to track our money and watch our progress as we build up our investments, pay down debt, increase our income or cut back on our spending. I really look forward to our monthly money meeting when we go through these numbers and see how we’ve done.

10. Be frugal without sacrificing the things you love

You won’t get rich by skipping your morning cup of coffee. I absolutely hate the advice out there that says you have to cut back in every area of your life – or stop buying avocado toast – if you ever want to own a home. As stated above, wealth and poverty are not as simple as skipping a Starbucks trip or two.

It’s also just not a fun way to live! Sure, maybe there are areas of your life where you want to cut back. Or maybe you do want to skip your morning coffee for a few months to save up for something bigger. But what you don’t want to do is cut out everything that makes your life worth living. You can absolutely build wealth and better your financial situation without sacrificing everything you love. You want to enjoy your life while working towards your money goals. 

I think it comes down to personal choice. We cut back on things that don’t really matter to us and spend more on things we love. For us, that looks like almost no money on clothing, home decor, entertainment and beauty services. But we pay quite a bit for travel, eating out, living in downtown Vancouver and ensuring our dog is healthy and happy. Your priorities will probably look a lot different!

One thing I do still struggle with is a poverty mindset, and it’s something I’m working on. I grew up learning the value of frugality, but I don’t want to confuse that with scarcity. I can make smart money choices, save, invest and splurge from time to time without constantly thinking, “We’re poor!”

11. Get informed

I started this (very long!) blog post off by saying that I am not an expert and that I believe you don’t have to be an expert to work on your personal finances. I still 100% stand by that. Time is your biggest asset and imperfect action is better than no action at all.

However, it pays to learn the basics. You don’t have to spend hours researching all the options or get a degree in finance, but you can spend some time educating yourself. After just a little bit of research, I felt really confident opening up our high interest savings account and different tax-advantaged savings accounts earlier this year.

Find the medium that works best for you – whether that’s books, blog posts, podcasts or something else. For me, I like to read a few articles that specifically answer any money questions I have. For general knowledge, I subscribe to a few money podcasts and I’m part of some personal finance groups on Facebook. I’ve read one or two finance books in the past and would be interested in picking up another – got any recommendations for me?

12. Remember: Personal finance is personal

At the end of the day, personal finance is just that – it’s personal. What works for me may not work for you. You may have read all 3000+ words of this blog post and disagreed with everything I’ve said. There is no one right way to manage your money.

All of the tips I shared above are things that work for me. I’d like to think they could apply to many situations and hope you did find something helpful in them, but take everything I’ve shared with a grain of salt. You and I likely have very different financial goals, histories, mindsets and risk tolerances. And that’s okay! The only person who has to be happy with your money plan is you.

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What is the best personal finance lesson you’ve learned?

 

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