Building financial stability – you’re never too young to get started

November 9, 2022

It’s never too early to learn about managing money, to find the right banking products and to start thinking about strategies to ensure financial success. Many young people feel overwhelmed with where to start and are uncomfortable asking for help. Everyone can benefit from guidance and how-to-tips from a trusted professional for basic banking needs like setting up the right accounts, handling debt, applying for student loans or in the longer term, goal setting and savings strategies.

Here are a few quick tips for an easy start

Create a budget: Know your fixed expenses (need to have) like rent, loan payments, cell phone and utility bills and your discretionary expenses (want to have) such as concerts, road trips, dinner out etc. Figure out what your monthly/annual net pay is (money you keep after deductions). Subtract expenses from net pay to know how much you have left for savings.

Live within your means: Creating a budget lets you calculate your finances so you can try to live within your means. Do not rely on credit cards or loans to balance your finances as interest rates are usually high and can add up quickly. This will increase your debt balance and use up savings that could be allocated to other goals.

Evaluate priorities: Decide on your goals. Short-term priorities could include bigger purchases and setting up emergency savings. Mid-term goals could be paying off post-secondary debt or saving for a down payment on a home. Think retirement savings for longer term – the sooner the better.

Make goals achievable and be patient: It’s important to think of financial success as a marathon and not a sprint. Try not to expect too much, too soon. It takes time, practice and patience to achieve financial goals – so set the time frame and budget to achieve these goals.

Increase your knowledge: Take the initiative to learn more about investing. Read about the features and benefits along with the pro and cons of different options. How will each option match up with your objectives, risk tolerance and timelines? Will it help you meet your goals?

Understand your investment options: A Guaranteed Investment Certificate (GIC) offers guaranteed principal and a rate of return through the interest earned. Interest income is taxed with no income tax efficiencies. The terms are often fixed and funds are locked in, therefore there is limited liquidity, so keep that in mind. GICs are typically used for short-term investing or for investors with a low-risk tolerance.

Mutual funds are pooled funds from different investors which are invested in various stocks and bonds. There is a wide range of mutual funds allowing investors to meet a wide range of objectives from low risk in fixed income funds to high risk through aggressive equity funds. The returns are generally more tax efficient. Mutual funds are generally redeemable on demand at the current market value. They are recommended for long-term investing as historically stocks and bonds have greater growth potential.

Make it a priority to build an understanding of these concepts and start using your financial know-how early. Focusing on your dreams, goal setting and following a plan will help you achieve financial success. It’s never too soon to benefit from the guidance of a trusted financial professional.

FirstOntario Credit Union in partnership with Credential Securities and Credential Asset Management Inc. has an experienced team of advisors specializing in various areas of wealth management including retirement planning, investment management, estate and succession planning, individual financial risk management and more. These professionals are here to help you plan for the future and reach your financial goals. Visit FirstOntario.com/Investments or call 1-800-616-8878 ext. 1700 to connect with a FirstOntario advisor and start growing your wealth today – your way.

Mutual funds, other securities and securities related financial planning services are offered through Credential Securities, a division of Credential Qtrade Securities Inc. Credential Securities is a registered mark owned by Aviso Wealth Inc. Mutual funds and related financial planning services are offered through Credential Asset Management Inc. Unless otherwise stated, mutual fund securities and cash balances are not covered by the Canada Deposit Insurance Corporation or by any other government deposit insurer that insures deposits in credit unions.