One of the earliest money lessons I learned was to pay yourself first. I was seventeen at the time and just got my first paycheque. Before I had a chance to spend any of it, my dad encouraged me to open a Registered Retirement Savings Plan (RRSP) at my bank.
It made sense, if I put aside some money now, it would grow. When I was ready to retire, I would have a healthy portfolio to draw on. While the theory was great and taught me to save at an early age, I’d argue that it gave me a false sense of security.
Since I was so focused on retirement savings, I convinced myself I was always doing well. The reality is your overall financial health is more than just retirement savings. Here are the things that I learned are equally important.
Education is key
Another money lesson I learned early is to spend less than you make. This tip has served as a foundation on my money journey, but it only gets you so far. Once I started reading books on personal finance, I found my comfort zone. No longer were terms such as management expense ratio, asset allocation or equities foreign to me. I now had a basic understanding of how the financial markets and investing worked.
It’s not like I instantly became some investing genius, but I had more confidence. I took what I had learned and started to question some of my advisor’s decisions with my portfolio. I quickly realized we were not aligned, so I parted ways with him.
There are tons of great Canadian personal finance books on the market but a few that I recommend include Happy Go Money by Melissa Leong, Millionaire Teacher by Andrew Hallam, and Shannon Lee Simmon’s Worry-Free Money.
Using credit cards to your advantage
When used responsibly, credit cards can be an incredible tool since you can earn rewards from them. Some of the best travel credit cards in Canada have a generous welcome bonus and come with benefits such as lounge access and no foreign transaction fees.
If you don’t like to travel, cash back credit cards may benefit you more since you’ll earn some money back with every purchase. Be sure to look for a card with features you’re interested in, such as roadside assistance, mobile device insurance, price protection, etc.
Although premium credit cards typically come with an annual fee, the benefits you get may be worth more than you’re paying. That said, there are many no fee credit cards in Canada that still offer decent rewards and perks.
High-Interest Savings accounts are my best friend
I remember when I opened my first bank account, I earned interest and I got a free subscription to National Geographic Kids. While it was great reading about animals around the globe, seeing my bank account go up every month was more thrilling. Mind you, it was only pennies at the time, but that was my introduction to compound interest.
Then I became an adult and my account changed. I was now being charged monthly fees with no interest given. It felt wrong that I had to pay fees to keep my money in a bank, so I researched alternatives. It didn’t take me long to come across high-interest savings accounts in Canada.
Right now, industry leaders such as Motive Financial and EQ Bank are paying around 2% interest, but that’s still much higher than what my traditional bank has ever offered me. Plus, I don’t have to pay any monthly or transaction fees. Setting up an account with a digital bank only takes a few minutes, so there’s no reason you shouldn’t consider it.
There is more than one way to save for a home down payment
Buying a home is a goal for many people, but that doesn’t mean you need to just keep it in your bank account until you’re ready to make an offer. The obvious place to park your money is in a high-interest savings account since your funds will be secure, but you also have other options available to you.
Guaranteed investment certificates (GICs) are another no-risk investment option, but since they have specific holding periods, they may not work for your timeline. The Home Buyers’ Plan ( is another popular option since it allows you to withdraw up to $35,000 from your RRSP, which can be used as part of your down payment. While that’s convenient, if your portfolio took a dip recently, you would realize those losses when you withdraw your money.
For those looking for something that offers a better return than GICs and HISAs, the Justwealth Capital Preservation Portfolio is worth considering. It’s still extremely conservative, but it has some exposure to the financial markets.
RESPs are great but don’t sacrifice your future
The Canadian Education Savings Grant (CESG) matches contributions made to your child’s Registered Education Savings Plan (RESP) by 20% (up to $500 per year), which makes it one of the best investments available. As a parent, you would naturally want to help your children with their education, but it should only be done if you’ve got the funds available to do so.
If you currently aren’t tracking to have enough saved for your own retirement, don’t focus on your child’s education. Put that money into your RRSP or TFSA so you won’t have to rely on your children for financial support during your retirement years.
Your financial wellbeing doesn’t start or stop with a second product or investment strategy, it’s a lifelong process that requires adjustments along the way. Getting help from professionals will be needed at times, but it’s still up to you to make the crucial decisions.