Here are 5 of the best financial decisions you can make with $450 as a young Canadian
As we face a cost of living crisis in Canada, it’s more important than ever to start making wiser financial decisions, and that means partnering with a financial institution that has your best interests in mind.
As a member-owned financial cooperative, Coast Capital aims to redefine the traditional relationship Canadians have with their bank by showcasing how a real partner can support them in the moments that matter.
And because every penny counts right now, for a limited time, new members can also earn 20% cashback (conditions apply) on their household bills to receive a maximum cashback bonus of $450.
To help make the most of that $450, we’ve partnered with Coast Capital to give you a few tips on how to spend your newly earned cash bonus.
Pay down your debt
One of the first things you should focus on when you get any extra funds is looking at the outstanding debts you owe, and look to pay those off first.
Not all debt is created equal, so use that $450 wisely. Whether you have student loans to pay, outstanding credit card balances, or another form of debt, it’s important to see where you owe money and which are the most concerning.
There are generally two approaches to paying off your debt: The avalanche method, paying the highest interest rate debts first; and the snowball method, paying off the smallest amount of money owed first.
Regardless of which approach works for you, it’s more important to pay these debts off so you can save yourself from accumulating interest.
Build up your emergency fund
Now that you have a better handle on your debt, it’s time to start your savings. If you’re starting entirely from scratch, and don’t have anything in the bank, it may be best to create an emergency fund.
A good tip that can help determine if you need an emergency fund is to assess whether you could last three to nine months without your current job. If that’s not the case, that $450 can go a long way to beginning that emergency foundation.
When you’re setting up an emergency fund with your new cash, a best practice is to start automating a small amount every month to help slowly build the fund over time.
It’s important to remember that you’re calling it an emergency fund for a reason — as you should only be using it for emergencies. Setting some guidelines around what you would use that account for, like a surprise housing expense or larger-than-average bill, will help you make good use of that money going forward.
Start saving for your financial goals
So you have a good nest egg in case of emergencies, which means it’s time to take that $450 and start saving towards a big financial goal — be it buying a house or retiring early.
For many young Canadians, there are two common savings accounts: Tax-Free Savings Accounts (TFSA) and Registered Retirement Savings Plans (RRSP) — each having its own advantages and drawbacks.
The Canadian government also recently opened the First Home Savings Account (FHSA), which is a brand-new account specifically designed to help you save for your first home, tax-free.
The type of savings account you open will depend on what your future financial goals are, so it’s best to do some research to see which account would work best for you.
Grow your money in a HISA or GIC
Investing can seem a little intimidating at first, but you don’t have to be buying stocks like you’re the Wolf of Wall Street. There are plenty of low-risk investment options that can help you grow your $450 over time.
A Guaranteed Income Certificate (GIC) is a great way to achieve guaranteed steady growth over a period of years, with flexible options to help you tap into the market. High-Interest Savings Accounts (HISA) can work to give you a steady return while also giving you easy access to your money.
Overall, you want to look at investments that will give you returns over time, not some high-risk investment that’s all talk. Remember: if an investment is too good to be true, it most likely is.
Lean on your financial advisor
You’re not going to become a financial expert overnight, nor do you have to be to make better choices. There are plenty of professionals out there who can help guide you through the process and get you on the right track.
With over 80 years of experience helping over 600,000 members, Coast Capital’s mission is to help support Canadians by delivering accessible financial tools, education, and advice for all.
If you’re ready to start making wiser financial choices, visit Coast Capital to book an appointment with a trusted financial advisor on their website, over the phone, or in-person to see how you can become a member and start earning 20% cashback, up to $450.
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