How to Manage Your Money Better

11 September 2023 by National Bank
Woman with dog in front of her computer

Proper planning and stimulating goals are priceless if your goal is better personal finances. With the right tools (and some discipline), not only will you be in better shape to achieve your goals, but you will also reach financial independence. Here’s our expert advice on managing your money better.

1. Get an overview of your financial situation

If you want to get a complete sense of your financial situation and need help managing your money properly, make a balance sheet. To do so, list everything you own – your assets – and everything you owe – your debts and liabilities. If you need help, you can use online management tools.

Take the time to create your financial statement & get a clear overview of your personal finances.

Get started

Basically, making a balance sheet gives you an idea of your personal financial situation, but it also allows you to track your progress over time. That’s good motivation.

2. Define your financial goals

Thinking of buying your first home, purchasing a car, or becoming a Canadian citizen? These are all exciting goals, but they cost money. If you want to achieve your objectives, start by setting financial goals and make sure you know how to manage your budget. When defining your objectives, you need to think about the short, medium and long term.

Your short-term objectives are what you would like to accomplish in the next few months or in the next year. Do you want to save enough money to move out of your parents’ house and rent an apartment? Buy a car? Pay for school? These are all examples of short-term goals.

Your medium-term objectives are goals you would like to achieve in two to five years. Buying your first home or starting a business are examples of medium-term goals.

Your long-term objectives are usually goals that stretch over an extended period of time. A perfect example is obviously your retirement. Preparing for your retirement may not be thrilling when you’re 20 years old, but the earlier you start, the less of an impact it will have on your wallet.

Setting financial goals will allow you to determine how much money you need to save to achieve those goals. It will also give you a better idea of which savings strategies are best suited for your situation. For example, you could set up a monthly systematic savings plan that automatically transfers money to your RRSP or TFSA.

3. Make a budget

A personal budget is a simple tool for reaching your short-, medium- and long-term goals. There are many advantages to making a budget. It’s very helpful for managing your money, allows you to keep track of your income and expenses, and gives you a clear sense of your financial situation.

Making a budget doesn’t necessarily mean you need to tighten your belt. Rather, it allows you to see where your money goes, and it’s an opportunity for finding money you could set aside to achieve your goals.

Keep in mind that a successful budget is one that you’re able to stick to. If you set financial goals and have a strategy for reaching those goals, you’ll be much more motivated to stick to your budget. It’s a lot easier to resist buying a new shirt when you know you’re saving for a new car.

4. Start saving early

Saving early is a strategy that can really pay off. That’s because you’ll be able to achieve your goals. But it also means that with the right strategies, you’ll be able to make your money grow. By investing your savings correctly, you’ll increase your chances of making a profit.

That’s the beauty of savings when you turn them into investments: they generate interest. For example, if you save $10,000 at an annual interest rate of 2%, you’ll end up with $10,200 at the end of the year. Having an extra $200 in your account is pretty encouraging. And that’s not all: year after year, your money will grow more and more, especially if you save regularly.

The earlier you start, the more your money will grow. Tell yourself that saving $20 a week for 20 years is much easier than starting to save $200 per week in 10 years.

That’s another reason why you need to choose the right place to invest your money. We recommend researching all the available investment vehicles, whether online or by talking to an advisor.

Another important point: don’t underestimate the importance of building an emergency fund. Usually, it should amount to three to six months’ worth of expenses. If you lose your job, or if you or a loved one gets sick, you’ll be able to pay rent and afford your expenses despite the unexpected situation. For example, if you put your emergency fund in a TFSA, you can easily withdraw your money when you need it tax free.

5. Manage and pay off your debt

After you made your budget, did you realize that you have some money left over at the end of each month? Great! Use it to pay off your debt. Conversely, if you find that your expenses exceed your income, you’ll have to “cut the fat.” Take action and determine what you can easily cut down on to quickly reach financial stability. Then, you’ll be able to think about how you can reduce your debt.

Getting help to pay off your debt is also part of sound personal financial management. Reducing your debt will have positive effects on your financial health. Get some advice from experts.

Which debts should I pay off first?

To determine which debts you should pay off first, consider your debt totals and their interest rates. Debt with high interest rates should be paid off first, because they usually cost you the most. Here’s a guide to help you stay the course as you pay off your debt:

● Make a budget.
● List all your debt.
● Separate the bad debt from the good debt. For example, remember that the interest on student loans is tax deductible and usually low.
● Tackle debt with high interest rates first.
● Discuss consolidating your debt with an advisor.
● Pay off your debt, but don’t let your emergency fund and your retirement fall by the wayside.

How do I avoid falling into debt?

The key to success is to use your credit properly. For example, in the case of credit cards, consider them mainly as a payment tool. Never forget that a poor use of your credit can impact your credit score.

Here are some tips to help you improve your credit score:

● Make sure to at least pay the minimum amount for each account by the deadline.
● Don’t max out your credit.
● Apply for credit only if you need to.

6. Make the right financial decisions during difficult times

If your financial situation has changed due to a loss of employment or a long-term illness, it’s normal to have trouble making the right financial decisions. Feel free to get help from experts – they’re there to share their knowledge and find strategies to help you achieve better financial stability. We’re here to answer your questions.

If you aren’t ready to come meet with us, answer a few questions below for some helpful tips that match your current situation.


- You asked: “How do I make a personal budget?”




I’ll explain faster than I can do 20 push-ups.


A budget can help anyone understand their spending habits, avoid debt, prepare for emergencies and reach their financial goals.


- One!

- Finding a tool that helps you organize your budget can be a big help.

It can be anything from an Excel spreadsheet to an app that you download on your phone.


- Two!

- Identify all your sources of income.

Use your bank statement to identify precisely how much money you make.

You could add up all your deposits, and that’ll tell you how much you have coming in every month.


Don’t be lazy!

Sorry, I’m talking to myself.


- Three!

- A good personal budget includes three spending categories.

Fixed expenses, that’s like your rent or your phone bill.

Variable expenses.

That’s groceries, or restaurants or shopping.

And infrequent or annual expenses like insurance, or your driver’s licence renewal and your annual ski pass.

- Four!

- Experts typically recommend putting 10% to 20% of your gross income towards savings.

Now I know, I know.

That might be painful at first, but no pain no gain!


- Easy for you to say.



- When you deduct expenses from income, you’ll find out if you’re at a deficit or not.

If you are, you might need to make a few cuts to your budget.

Maybe you’re like me and you spend way too much on stylish activewear.




If you have a deficit, it’s easier to cut down on variable expenses like restaurants or shopping.

But if you have any money left over – you can pay off some debt or put some into savings in case an emergency comes up.

Now that you know how to do it, stay on top by keeping track of your budget month to month.

It’s all part of getting into great shape... financially.

I think I’m done.

How about you?


- Only one left!


- You wish.

- Are you wondering how to pay off your debt?


(rhythmic music)


I'll explain in less time than it takes me to do a sun salutation.

All twelve poses.


- Tsk tsk.

We don't say poses.

We say asanas.



All twelve asanas.


(bell dings)


- Credit card, line of credit, student loan, car loan…

If you want to pay off or reduce your debt, we have tons of tips and tricks to get you there.

All you have to do is take it step by step and reduce your debt…


- And your stress.

- You are causing me stress.




- First Asana, Mountain.


- Even if you have a mountain of debt, breathe gently through your nose...




...and make a list of all your debts, including the amount, minimum monthly payments and interest rate.


- Second Asana.


- You don't have to announce every single po-- Asana.

The second step is to make a plan, over a year, for example.

That will allow you to evaluate how much you should pay back per month in order to achieve...

- Nirvana!


- Your debt with the highest interest rate should be paid off first, because it costs you more.

You have different kinds of debt with the same interest rate?

Pay off the smallest one first.

It'll be gone sooner and that's...

- Relaxing!


- Relaxing.

Above all: always make your minimum payments, every month, for all your debts.

Your credit score will thank you.


- Third Asana!

- Now you're really stressing me out.

Make a budget to see where you can cut your spending.

If your budget is tight, change your spending habits.

You can repair your broken devices, become a bargain hunter, buy used.

You can also consolidate your debt.

That means asking your bank for a loan to bring all of your debt together into one monthly payment, often at a lower interest rate.

Talk to an advisor about it.

Even if you reimburse all your debt, try to put some money aside for emergencies.

Then, you can think about saving and investing.

And even once your debt is under control, it's important not to create more.


(waves crashing)


(bell dings)


I won!

- It wasn't a competition.


- It was, literally, a competition!

Let's go.


- Nah. I'mma stay.


(bell dings)

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Need advice?

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