6 Family Finance Tips for Canadians

One of the greatest challenges in life is determining how to finance family obligations time and time again. Unfortunately, more than half of Canadians say they couldn’t handle an unexpected expense of more than $1,000, and the problem is only getting worse.

While every financial situation is different, numbers don’t lie. There are ways for families to improve their financial situations, and we have some time-tested methods to share with you! Here are some family finance tips to secure your family’s future!


1. Review Your Current Financial Situation

The most important step you can take toward financial security is to take a hard look at your current finances and determine where you stand. This doesn’t simply mean opening your checking and savings accounts on your phone and looking at the numbers. Instead, take a look at your billing statements.

After this review, you should understand your debts, savings, investments, standings on bills, income, and where your money is being spent. Without this information, it’s hard to make the necessary adjustments.

If you’re one of the 85% of Canadians that don’t regularly pay with cash, then this should be easy for you. Look at your checking account and any credit card statements to see how much you have, how much you owe, and where you spend your money.

Of course, there are necessary expenses that can make it hard to save on, but it’s worth a shot. For example, if you notice that you have a high grocery bill, you may want to try couponing, switching stores, or signing up for loyalty programs. It’s difficult to save on childcare, mortgages, and other routine expenses, but try to keep them under 50% of your income if possible.

Beyond that, it’s important to see where the “fun money” is going. This shouldn’t account for more than 30% of your income. Quick fixes like making coffee at home or packing lunch for the family can go a long way toward reaching that goal!

Your remaining 20% should go toward investments or savings. If you discover that this isn’t feasible with your current financial habits, then it’s time to look for alternatives!


2. Set Up Individual Savings Plans

Family finances should include everyone in the family. Every financial situation is different, and not all families can achieve this, but it’s best to build individual savings for each family member if possible.

If you want to prepare your children for university or give them a head start, starting a savings plan as early as possible could go a long way. You would be amazed how quickly it happens, so don’t put it off for too long!

Feel free to open accounts in your children’s names for them to access when they turn a certain age or reach a certain milestone.

Of course, it’s also important to have a family savings plan. Ideally, you want to save at least 10% (aim for 20%) of your income into the family savings. If you want to include this savings for vacation funds, then aim higher than 10%, as vacations often cost thousands of dollars.

Let’s say you have 15% of your income to save and two children. In that case, try putting 2.5% into your children’s savings accounts at a time and the remaining 10% into your savings account. 2.5% may not sound like much until you consider the context of 15+ years.

If you have 10 years until your child turns 18 and you have an annual (net) household income of $80,000, then you will have saved $20,000 for each child with 2.5% savings over that time. It will add up!


3. Set Aside Emergency Funds

Separate from your savings account, your family should have an emergency fund. The more people in the house, the greater the chances of an emergency expense. You may need to pay for a new car, insurance deductible, or tooth surgery at any moment, so it’s best to be prepared.

Also, what happens if you have to dip into your savings for something and then still have an unexpected expense? Emergency funds are there for emergencies. If the time ever comes when you need it (let’s hope it doesn’t), you’ll know to use that money.

Generally speaking, we would recommend having between $500 and $1,000 per person in the household saved up. If that sounds daunting, it would be okay to dip into your savings a little to get started and simply start adding more funds over time. Loose change, random cash you receive, tips from work, or regular small deposits will add up more quickly than you think!


4. Plan For the Worst, Hope For the Best

Insurance is there for a reason; we can’t predict the future. Nobody wants to think about worst-case scenarios, but if they happen, it’s important to be prepared. If you don’t currently have life insurance, car insurance, or homeowner’s insurance, or if you’re underinsured, it’s important to address this right away.

Ideally, you want to rest assured that if something happens to you or your spouse, it will not destroy the family financially. Accidents happen, and there’s no way to prevent them entirely. However, there are ways to ensure that your family will be financially secure after an unfortunate event.

For car insurance, it’s important to have comprehensive collision coverage, especially for newer cars that may be more expensive. A steady, predictable bill is something you can plan for, but an accident could cost an abrupt $10,000 to $30,000 without proper coverage.

Lastly, your house is likely your most valuable financial asset. If something happens to your home, you want to know that you’re protected. Luckily, homeowner’s insurance isn’t too outrageous of a monthly cost, especially considering the potential savings.

If a tree falls and destroys your roof, you could pay a $500 deductible through your insurance provider as opposed to a $25,000 roof replacement and $5,000 tree removal cost. If something like that never happens to you, then it still wasn’t a waste of money, offering you peace of mind the whole way through. Again, plan for the worst and hope for the best!


5. Pay Off High-Interest Debt

Credit card debts, payday loans, family auto finance, and other high-interest debts can create an impossible loop for families, potentially trapping them in debt for years. A $10,000 balance on your credit card may seem manageable when you see the minimum payment, but a year of making minimum payments without spending an extra dime will still leave you with a balance of over $12,000 in most cases. If your interest rate is higher than 20%, then it will be even more.

Again, that’s after only one year! If your family finds itself in a prolonged period of financial stress, especially with the impending recession, then it could take longer. This will destroy your credit and make it harder to get loans in the future, and you’ll wind up owing a lot more later on.

If you have high-interest debt you’re worried about paying off, consider taking out a personal loan with a lower rate and making regular installment payments. This can directly save you money, improve your credit score, and make your debt more manageable. Even if you have bad credit, you can try no credit check loans!


6. Save for Retirement

Unfortunately, few Canadians have any retirement savings at all, let alone being on track to retire by 65. While it’s important to think about the immediate and short-term needs of your family, it’s equally important to plan for your future with your spouse. Sit down and talk about how you want to live in retirement together and determine how much money you will need to achieve those goals.

If your employer offers a pension or retirement match program, take advantage of this right away! The sooner you start preparing for retirement, the more likely you are to achieve it. Also, if the money is taken out of your paycheck automatically, then you’ll never have to worry about it!

Retirement should never be an afterthought. Retirement savings should be considered an essential investment, and you should base your family’s budget around your income after your retirement savings. It isn’t selfish to worry about your future.


Put These Family Finance Tips to Use

Now that you know some family finance tips, put them to use and start saving money today! Financial commitments take time to show results, so just be consistent and patient, and remember why you’re doing this.

Stay up to date with our latest financial tips, and don’t hesitate to contact us with any questions or for help with your finances!

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Get your online loan, paperless & fast.

Quick Personal Loans for Canadians :

  • No credit investigation
  • No documents required
  • Repay in up to 90 to 120 days
  • $500 short-term loans