10 Tips for Resolving your Financial Problems

29 January 2024 by National Bank
Financial problems

No one is immune to financial problems. Poor planning or going through a tough time, such as a divorce, illness or unemployment, can really tip the scales. Need help? Here are 10 tips for resolving your financial problems.

1. Identify the problem

Being in debt does not necessarily mean that you have financial problems. Very few people would be able to buy a house or a car otherwise. However, certain red flags should be taken seriously.

Do any of the following statements apply to you?

  • You have many credit cards and you sometimes use one to pay off another.
  • You've had to refinance your home to support your lifestyle or pay off debts.
  • You are unable to pay off more than the minimum amount required on your credit cards.
  • You delay or skip certain payments.
  • More than 40% of your gross income goes to paying off debt.
  • Your financial situation is a source of stress.

If so, you'll need to take some steps to correct the situation.

2. Make a budget to help you resolve your financial problems

The first step towards managing your financial problems is making a budget. You can use:

  • Budgeting software
  • An online budgeting tool 
  • A mobile app
  • Or simply a piece of paper, a pencil and a calculator

Write down all your sources of income and all your expenses.

To avoid underestimating your expenses, save all your bills and receipts for a month. 

Also consider occasional expenses like school supplies, gifts, vacations, your driver’s licence, etc. Don't forget to budget for paying off your debts.

Reorganize your debts 

Don't forget to include debt repayment among your expenses. 

Start by identifying your debts and listing their amounts and interest rates. Then pay off the debt with the highest interest rate, or consider debt consolidation. Consolidating your debts into a single loan with a lower interest rate will help you pay them off faster. In this case, make sure the interest savings are used to accelerate debt repayment, or for long-term savings. If these savings end up as expenses, the problem will persist.

To find out more, read our article Debt management: How to pay off your debt

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Good to know: Many consumer associations offer training on budgeting and debt managment. You should have a look!

3. Lower your expenses

Analyze all of your expenses to see which ones you can reduce or eliminate.

Think about reviewing various packages, such as your telecommunication services. You could save by ensuring all they do is meet your needs—nothing more and nothing less. You could also start looking for deals, make a food budget and limit the cost of eating out by packing your own lunch.

4. Pay in cash

Paying in cash can help you stick to your budget. Debit and credit cards are convenient, but they can make it harder to track your expenses.

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Budget tip: Put your cash in separate envelopes for groceries, entertainment and clothing.

→ Looking for new tips to help you save? Read our article: 35 tips to help you save money and optimize your budget.

5. Stop taking on debt to avoid aggravating your financial problems

If you tend to make impulse purchases and regret them later, you may want to start leaving your credit card at home.

Avoid taking on additional debt by living within your means. Make sure you have enough to repay your credit card balance and other debts.

6. Avoid buying new

There are many alternatives to buying new.

  • Buy used or exchange goods. Check out thrift stores, online classifieds ads and Facebook pages for neighbourhood sales. There are many bargains and opportunities for trades.
  • Borrow or rent. This is a good option for items you will rarely use. For example, sign up for a library card to check out books and magazines.
  • Do it yourself. Over the long term, using a coffeemaker is much cheaper than buying coffee every day.
  • Take advantage of freebies. For example, there are many free shows and activities at festivals.

7. Meet with your advisor to discuss your financial problems

Your advisor can help with your financial problems. They will help you review:

→ For tips on optimizing your credit card use, read our article: 6 smart ways to use your credit card.

8. Increase your income

Think about ways to increase your income to deal with your financial problems. Here are some options:

  • Ask your employer if you can work overtime.
  • Offer products and services for extra income.
  • Sell items that you no longer use.
  • Find a roommate.
  • Get a second job.

Be wary of ads that claim you can earn money easily. These are often scams.

Use your emergency fund

In the event of a problem, you can dip into your emergency fund instead of putting yourself into debt. However, make sure you don't make a habit of it. As the name implies, it should only be used in exceptional circumstances. 

Your emergency fund is a cushion to help you deal with the unexpected, such as losing your job or a broken electrical appliance. Ideally, it should cover between 3 to 6 months of expenses, so be sure to use it wisely!

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Pro tip: avoid dipping into your retirement savings, especially your RRSPs. Your withdrawals will be taxable, and you'll also lose contribution room that could be useful in the long term. 

Read our article on withdrawing funds from an RRSP in the event of debt to further understand the potential implications.

9. Be realistic when it comes to resolving your financial problems

Realistic goals will help you stay motivated and reduce your financial stress.  If you've overspent for many years, you can't expect to pay off your debts in just a few weeks. 

Just like a diet, significantly restricting your expenses will only increase your appetite to spend. Plan a little wiggle room in your budget to treat yourself.

10. Improve your credit score and adopt good habits

Do you have bad credit? That means you'll be offered higher rates on financing. Why? Because you present a greater risk for the financial institution. Here are a few tips to improve your credit score:

  • Pay your bills on time.
  • Try to keep your credit card balance well below your limit.
  • Don't submit too many credit applications.

Once you have managed your financial problems, continue taking care of your personal finances. The money you save will allow you to create an emergency fund. Ideally, this fund should equal three to six months of expenses. If you run into issues, you'll be able to withdraw money from the fund instead of going into debt.

Next, you can start saving to finance other goals, like retirement, travel or your children's education.

Nobody is immune to financial problems. A stroke of bad luck or a poorly controlled budget could happen to anyone. The important thing is to take action and get help from our team of specialists when necessary. With the right support, you'll be able to manage your financial problems.

- 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.

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