FLM 2017: These 3 Money Habits Will Help You Reduce DebtNov 06, 2017
Recent grads: let’s rewind to a time before you even thought about the need to reduce debt.
Anyone who’s been through the university experience knows it can be stressful. Late night cram sessions, super-sized coffees, project deadlines — it’s all just part of the ride.
For so many young Canadians, though, the stress doesn’t stop at graduation. The need to reduce student debt is an ongoing issue for grads, and many are still dealing with it 10, even 20 years after their cap toss.
If you’re in this boat — trying and failing to get relief from your student debt as your budget strains — now is the perfect time to see if changing habits can help. November is Financial Literacy Month, a national initiative to boost money smarts and reduce debt in all age groups.
Debt relief isn’t a short game, especially when dealing with average student debt loads of over $25,000 in Ontario. You need to be diligent, and develop realistic habits to sustain in the long-run.
Here are three money habits that are worth developing.
Find an easy method to track spending. Not everyone has the patience for an Excel spreadsheet. Tracking what you’re putting your money toward is important, but finding an easy way to plug in transactions daily might be even more so.
With financial apps like YNAB (You Need a Budget), you can have your income automatically separated into priority areas. Have debt to pay off? YNAB will help portion this out every month. Spending too much on movies? YNAB will help you stick to a capped spending limit.
Make a plan for 2018. Financial Literacy Month is in November for a reason — it’s meant to spur you to think about the year ahead. Do you have a plan for dealing with student debt in 2018?
Sit down for a few hours and think about what you want to spend on next year. Are you planning a trip? What should your budget be? How can you best balance life goals and a plan to reduce debt? These planning sessions will help you avoid spending potholes and get you reducing debt in bigger chunks.
Change how you reduce debt as your life switches up. When debt is over $25,000, there aren’t many shortcuts to paying it off. That’s why you need to continue making debt a priority, even as your life changes after graduation.
Christine White, a money coach at Money Coaches Canada, provides expertise on one of the first life decisions young adults must make after graduation: whether to rent or buy.
Her advice? Pay off your student debt first, then start power saving, and strive for a 10-per-cent down home payment.
Having a plan will help you get to your goals faster. It starts, though, with creating good habits and prioritizing a plan to reduce debt.