Many Canadians are faced with the reality of managing a household on one income.
A recent Globe and Mail Article highlighted the story of someone who overnight became a single mother. She reached out to a debt counseling service which helped manage her debt load of $20,000, and to curb expensive spending habits she had developed during the course of her 16-year marriage. Today, she is debt free and saving for the future. Read her story.
The article also offers some tips on staying debt free on a single income.
1) Pay off credit cards
Credit card interest is high (usually somewhere between 21 – 29 %). If you are carrying a balance on your card, look at creating a plan to get that debt paid off without taking on more debt.
2) Debt consolidation loans
If you find yourself struggling to get you credit cards paid off, look into getting a consolidation loan from your bank. You may also consider talking to a credit counselling agency such as Money Mentors or the Credit Counselling Society.
3) Workplace savings plans
If your employer has an automatic savings plan, use this to save money. Paying yourself first (taking money off your cheque before your other expenses) is one of the best ways to save.
4) Automatic transfers on multiple accounts
You can also set up a pay yourself first system through your online banking. Have money automatically transferred from your chequing to a savings account the day you are paid.
5) Paying into RESPs
Setting up an RESP for your child is really a no brainer. It’s free to do so at your bank or credit union, and it is okay if you don’t have the money to put in right now – you can open an RESP with no contribution needed. If you live on a low income, you will also qualify for free money from the Government, just for opening the account.
6) Create a coin jar
Small amounts add up to much larger ones over time. Save your coins, or set up an automatic transfer of even a few dollars each week.
7) Establish a budget
You need a budget! A budget will tell you where your money is going, and help you to keep on track with your spending. Attend a free Budgeting workshop at Momentum to learn more.
8) Don’t be afraid to ask for help