The current state of the economy is significantly influencing Canadians, as the 40-year high inflation rate is affecting the purchasing power of many households. A study commissioned by the charity Prosper Canada found that 73 percent of lower-income Canadian households overall are ‘extremely vulnerable’ or ‘financially vulnerable.’
The study also found that many households cannot access the financial help they need to deal with the ongoing cost of living crisis and challenging macroeconomic environment. If you’re in the same boat as other Canadians struggling to manage their money, what can you do to stay strong?
Consider implementing the following strategies to manage your money better and improve your financial health.
Improve Financial Literacy
Financial literacy is the foundation of your relationship with money and refers to the ability to understand and effectively use various financial skills, such as budgeting, investing, and finance management. As you deal with the negative impacts of the global economic state, you must have deep knowledge about finances to tackle specific issues. Even if you know the basics of finances, a lack of financial literacy can lead to poor choices, resulting in money loss or unfavourable investment decisions.
Taking measures to become financially literate can help you make informed decisions to reach personal life goals, maintain a budget, manage debt, and identify financial fraud. You can improve financial literacy by talking to a financial professional, doing online research, reading books, and subscribing to financial content.
Take an Installment Loan
It’s okay to need some help sometimes, especially when the economic situation is seeping into your finances and negatively affecting your life. An effective way to turn things around and support yourself or your family is through an installment loan. An installment loan is money you borrow from a lender that you repay over time with fixed, regular payments.
If you think an installment loan can help you become more financially stable, compare options from different lenders offering installment loans in Canada and choose one that best suits your needs. A reputable lender will offer a flexible application and borrowing process, ensuring that you can get quick access to cash when you need it without adding to your stress. When you choose a licensed online lender, you will feel more comfortable with the process as there will not be any hidden fees, reducing the risks of unforeseen expenses.
Follow the 50/30/20 Budget Rule
Managing your money and maintaining a budget can be overwhelming, so it can be helpful to follow a percentage-based budget that divides up your monthly income to go toward your expenses, savings, debt, and whatever categories you choose. A common percentage-based budget is the 50/30/20 rule, which divides your income into three categories: 50 percent on needs, 30 percent on wants, and 20 percent on savings or paying down debt.
Needs are bills that are necessary for survival, including mortgage, rent, utilities, and groceries. Wants are optional expenses, such as shopping, dining out, or gym memberships. Lastly, savings are funds you put aside to meet larger goals, pay off debt, or build an emergency fund. Implementing the 50/30/20 rule allows you to effectively manage your budget and stay prepared for unexpected financial situations. However, the percentage of each category can be customized based on where your live, your income, and your lifestyle.
Feeling financially insecure can increase stress and lead to unfavourable spending decisions. Build yourself a safety net by strategically managing your money to boost your financial health.