The BMO Household Debt Report shows 25% of Canadians are debt-free, but 41% say they have taken on more debt in the past five years as a result of increased spending.
BMO offers the following tips for managing personal finances:
Spend less than you make. Develop a budget that establishes how household expenses will be paid and how spending will be managed.
Manage credit card debt
Pay down credit cards, beginning with those that carry the highest interest rate, and consider using a low rate card for purchases.
Invest to save
Set up a Tax Free Savings Account (TFSA) or high interest savings account to set aside extra cash in case of an emergency.
Become mortgage-free faster
Cutting your amortization and increasing monthly payments on mortgages can help you pay down your mortgage faster while saving you thousands of dollars in interest costs. Additionally, consider increasing the frequency of your payments and/or making lump sum payments to pay down your mortgage faster.
Read: Until debt do us part
Have a Plan B
Develop a fall back plan in case you are unable to meet your financial obligations as a result of unexpected circumstances, such as loss of work, or damage to personal property, such as your home or vehicle.