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Debt Advice for First-Time Budgeters and How to Set Goals

Young adults and students in Canada should look over their finances this month and prepare for the upcoming year. Whether you’re seeking debt advice for repaying a student loan or guidance on how to create a rainy day fund, emphasize creating realistic budget goals instead of sweeping resolutions come January.

Creating a budget guideline to meet financial goals

Referred to as the 50/30/20 or minimalist budget, this formula is a good way for first-time budgeters to keep track of their spending, debt and everyday expenses. Here’s how a minimalist budget works:

Essentials = 50 per cent of your income. Essentials include, housing, childcare, transportation, food, utilities, taxes; basically everything you need to live. Because you’ve allotted half your income to this category, it’s up to you to prioritize expenses. Example, if your housing costs are higher, you may need to deduct from another expense to balance your responsibilities.

Savings = 20 per cent of your income. This category includes savings, debt repayment and investments. Think of this as your “plan for the future” category where each dollar you put toward savings or debt repayment is an investment in your financial future. If you’re currently not assigning 20 per cent of your income toward these categories, make it a goal for the new year.

Personal = 30 per cent of your income. This amount shouldn’t infringe on your other categories. For this category, you can incorporate the practice of intentional spending. This means that you only choose to spend your money on items or services that enhance your life and bring you joy as opposed to retail therapy with buyer’s remorse. The less you spend in this category, the more you’ll have to assign to your future goals. Gail Vaz-Oxlade’s life-pie breaks this concept down further.

Why SMART goals are better than resolutions

Simply saying, “I want to eat healthier in the new year” doesn’t magically clear the cookies out of your cupboards on January 1st. You have to consciously make the choice each day to eat healthier, get more sleep, shop smarter and avoid temptation while transitioning into a healthier lifestyle. The same is true with your financial goals. It isn’t enough to want to get out of debt or save more money. Instead, you must set specific, measureable, attainable, realistic and time-framed goals that will allow you to transform your financial health over time.

Tools to help you reach your goals

United Way’s Small Change app can help you improve your savings by changing small habits each day. Use the money you save to add to your emergency fund, debt repayment or other financial goal.

The Financial Consumer Agency of Canada (FCAC) has a wealth of resources to help you meet your financial goals at any stage of life. Families in Ontario can find debt help, learn about how to save for retirement, or buy a home or any other life milestone. Get started by using the Financial Goal Calculator.

If debt payments are holding you back from achieving your financial goals, look for debt advice from a debt relief professional. You can also learn more about solutions including debt consolidation, a consumer proposal or the process of bankruptcy by visiting the Government of Canada’s website here.


What steps will you take to find debt advice and meet your goals in 2017? Share your tried and true tips for budgeting and debt repayment by connecting with others on Twitter. Search the hashtags #LetsTalkDebt #BDOdebtrelief

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