Advice for the Early Career Years

 
 

We often hear people ask “where do I start?” This question has been asked to me by young couples with no children, by middle aged couples with multiple children, and by mature single people. Whatever your age and stage, finances can simply feel overwhelming. I am going to focus on those, like myself, in their early career years and provide some personal experience and what I have learned.

Debt

When my boyfriend and I finished university and finally started receiving a consistent income, we decided on two things: we would pay off all student debt as fast as possible, and we would continue to live similarly to the way we did in university. We maintained a strict budget in order to save as much as we could. Understanding the power of starting early we wanted to build our savings as fast as possible, and both agreed sacrificing some wants was well worth it in the long run. My boyfriend had $14,000 in student loans, and he managed to pay it all off in five months. He did this by applying all his savings to the loan. This was money he had put away for this very purpose from summer jobs and from student grants from the government. Also by living frugally he was able to apply as much as he could from his pay cheques. I luckily had no student loans due to a combination of university scholarships in, great summer jobs and a registered educational savings plan (RESP) my parents had started for me (I understand I am extremely lucky for this situation).

Maximizing TFSA and Minimizing Spending

Once we had all debt paid off, our next step was to work on maxing out our tax-free savings account (TFSA). A TFSA is a registered plan where any gains or income accumulate tax-free. Our goals were to ensure we maxed out these each year and didn’t withdraw from them. It was our forced savings plan, and we invested fairly aggressively in the account because we knew we had time on our side. I am not recommending being aggressive in your TFSA is always the right choice, but for us, at the time, it was. A TFSA is also a great tool for the early career years because you can withdraw from it any time. So, say if a home purchase is on the horizon this account is an excellent place to save for it. Because our incomes weren’t that high we didn’t feel much urgency in contributing to RRSPs. Plus, we have a pension matching program with our jobs that we take full advantage of.

The mantra we use for budgeting is “pay yourself first”. Every time we are paid, we pay ourselves first by sending money to our investments or savings. Then after the bills are paid, whatever is left is what we have for the next two weeks.

This forces a lifestyle of frugality, consistency, and prioritizing. We don’t eat out very often including making our lunches nearly every day. Eating at home saves us loads. We live in a place with affordable rent, we cancelled cable and we basically try to keep expenses to a minimum. For more ideas on how to save money check out Ten Place to Cut Spending. We work hard every month and have created good habits that will hopefully see us through all the stages of our lives.

 

Based on my personal experience my main tips for the early career years are:

· Make paying off debt a priority. Interest on debt is not your friend.

· Live simply. Make your lunches, for example. Keep your expenses low.

· Once your debt is paid off, SAVE!

· Look for free money from the government. For example if you suffer from a disability you may be eligible for a registered disability savings plan, where you receive grants and bonds from the government. It can be up to 300% matching! Reach out to us if you would like more information on this.

 

One of my favorite quotes right now is,

Modern slaves are not in chains, they are in debt.

Don’t be a slave to your expenses. Life is challenging enough without worrying about finances. Even if you are not in your early career years, this advice holds true throughout all of life’s stages.