It’s no secret things are getting more expensive. While inflation hit 8.1% — the highest in our country’s history — in June and the prices of food bought in stores rose to 10.8% in August — its fastest increase since 1981 — Canadians have been finding solutions to cope with the squeeze.
With so much uncertainty around our finances, it’s important to be mindful of how we’re spending our hard-earned cash, and how we could potentially be saving it.
To help us gain some perspective, Daily Hive spoke with Charlotte Pecknold, about some of the biggest problems young Canadians are facing when it comes to their finances. Pulling from her decade of experience at Coast Capital in personal banking as a relationship manager, she gave us some useful tools and advice on debt management, building your savings, and the importance of speaking with a financial advisor.
“I think money is a tough subject for people,” Pecknold told Daily Hive. “And I feel grateful that our members trust us enough to come to us to get them started on the right path.”
She tells us that it’s important, now more than ever, to form a relationship with your financial institution to make sure they’re doing the most for you.
“I think all financial institutions have a responsibility to guide their clients to where they want to go,” says Pecknold. “You can’t approach financial solutions with a one size fits all mentality. Each person’s circumstances are different, and the relationship between you and your financial institution is important to establish all your potential options.”
The biggest problems facing young Canadians
Among the problems facing young Canadians when it comes to finances, Pecknold cites the rising inflation rates and debt management as two key issues, especially for those looking to buy a home in the near future.
“Because cities are becoming more expensive, it’s likely that [young Canadians] are carrying debt as a result of monthly expenses,” says Pecknold. “Then you pair that with unexpected things that come up, or overspending, and what I noticed is that people don’t often think about the best way to hold or manage that debt.”
It might seem hard to find the extra money right now, and everyone’s financial goals are different, but whether you’re looking to save more, working towards home ownership, or paying down debt, Pecknold says meeting with a financial advisor can help.
How to start saving
For those looking to purchase a home, Pecknold suggests you do research into what you can afford and start saving for that amount. A good way to start is by using the Coast Capital mortgage pre-qualification tool, which gives a realistic estimated mortgage amount you might qualify for based on the information you provide.
Pecknold also cited the recent Home Buyers’ Plan program by the Government of Canada as something young Canadians can take advantage of when looking to save. “If you’re contributing to an RRSP as part of your regular savings plan, $35,000 from there can be put towards your home purchase.”
TFSAs are also low-maintenance and flexible savings accounts young Canadians can open to start saving immediately without being taxed.
Budgeting is a straightforward approach to saving money for a home as well, but Pecknold also stressed it’s important to find a budget that works for you and stick with it — no matter how many slip-ups you have.
“You will get off course from time to time, so give yourself some grace and make sure you stay on track going forward,” says Pecknold. “Figure out how much you can realistically save, and automate that amount, so you don’t have to think about it.”
How to manage debt
For those looking for better debt management, it’s a bit more complicated and varies based on a person’s needs, says Pecknold. A universal thing debt holders should do is assess the sources of debt, where it’s located, and the interest associated with it. This will help sort out which debt is the highest priority for a person to pay off.
“If you are holding debt, ensure that you’re focused on making minimum payments on all of your outstanding debt items each month, focusing on paying down your highest interest rate debt first.”
Another suggestion Pecknold gives debt holders is to talk to a financial consultant to see what options they have around consolidating all debt into one source. This would allow for debt holders to clearly manage their debt with one payment, rather than keeping it spread out amongst different sources. But again, this will vary by circumstance.
How to choose a financial advisor
When choosing a financial advisor to work with, Pecknold encourages people to consider four factors.
Firstly, think about what you want advice about, be it investing money or borrowing — different advisors have different skills. Often, the advisor will have contacts and referrals to other specialists when your needs change.
Asking about credentials is another important consideration. It varies depending on the province in which they operate, so do the research to make sure they’ve kept in line with regulations.
Another important consideration is how comfortable and clear they are around fee transparency. All financial advisors should be upfront about their costs. If there are any hidden fees or they are vague on fee details, run.
Finally, interviewing a few different advisors before settling on one will help you assess your options and get you feeling comfortable. “A member/advisor relationship is a very personal one, and you want to make sure you feel comfortable sharing your personal financial information with that person,” says Pecknold.
And that’s what Coast Captial does best, cites Pecknold — putting their members at the centre of their experience. To get a better sense of how they can help potential members, advisors offer complimentary one-on-one advice sessions over the phone or in person at any Coast Capital branch.
They also offer a free, online tool called Money Chat that members can access on their own time. Money Chat is a unique approach to understanding your current financial health, where you want to go and how to get there.
“The Money Chat experience allows us to see what’s top of mind for our members, and identify their goals,” says Pecknold. “We can then ensure that we’re focused on providing solutions or advice around what matters most to the person who we’re serving.”
When asked, Pecknold acknowledges that it’s incredibly challenging right now for young Canadians, not just the economic climate, but the mental and emotional toll that this economic uncertainty has caused.
“Right now, Canadians are struggling. Individuals, families, and businesses are coping with different difficult financial and social realities, and have been forced to adapt to new ways of working and interacting.”
Again, she stresses that talking to a trusted advisor about your finances can help put them into perspective, educate you on how to make smarter financial choices, and give you tangible solutions to any economic anxiety you’re feeling.
“I’m not saying that it’ll be easy, but having that partner and a plan can be instrumental to getting you where you want to go.”
For more information on how you can become a member and have a free Money Chat, visit Coast Capital’s website. For a limited time, new members are eligible to receive up to $500* — *conditions apply.
This article is provided for general information purposes only. It is not to be relied upon as financial, tax, or investment advice or guarantees about the future, nor should it be considered a recommendation to buy or sell. Information contained in this article, including information relating to interest rates, market conditions, tax rules, fees, and other investment factors is subject to change without notice, and Coast Capital Savings Federal Credit Union is not responsible to update this information. All third-party sources are believed to be accurate and reliable as of the date of publication, and Coast Capital Savings Federal Credit Union does not guarantee the accuracy or reliability of such sources. Readers should consult their own professional advisor for specific financial, investment, and tax advice tailored to their needs to ensure that individual circumstances are considered properly and action is taken based on the latest available information.