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7 money rules you didn't learn in school

August 21,2023

Author: Martha Harbell

Did you learn how to manage your money in school? Probably not - most schools don’t teach kids much - or anything - about personal finances. As a result, many adults feel like they don't know much about their own money. This can become a major source of stress.

The good news? It’s never too late to learn. Let’s start with seven basic rules that everyone should know.

1. Spend less than you earn

This math is simple. When you spend less money than you earn you’ll have extra that you can set aside to save for an emergency fund, long term goals, paying off debt, and more.

2. Always be saving

Everyone talks about needing to save lots of money for long-term goals like buying a home, sending your kids to university, and retirement. It’s true, saving up for these things is important, and it’s a lot easier if you start early. It’s also true that you’ll always be spending money on something - whether it’s replacing your fridge, going on vacation, getting married, doing home repairs… the list goes on. So set savings goals for all your medium-to-big expenses, too! That way, you can avoid carrying high-interest credit card balances or taking out loans.

3. Follow a budget

Why do people cringe when they hear the word 'budget?' A budget is just a record of how much money you’re bringing in and how much you’re spending. When you have all the numbers in front of you it’s easier to work out how much you’re spending (and on what) and how much you need to save in order to reach your savings goals. You can use those numbers to adjust your money habits as needed.

Not so good with math? There are lots of apps out there that you can use to create a budget. Or, check out Credit Canada’s Monthly Budget Worksheet.

4. Set aside at least 20% of your income

About 10 years ago, many savings experts would have said that you should set aside at least 10% of your income and put it in savings. These days, most experts will tell you that you should be saving at least 20% of your income. First, set up an emergency savings fund that can cover at least six months of expenses. Then, start putting savings aside for long-term goals, like your child’s education, buying a home, or retirement.

When you get a raise (congrats!) and start earning more money, remember to stick to the same percentage. As you earn more, you should be saving more too!

5. Learn about interest

One of the best money lessons you can learn is how interest works. How does interest affect how much your debt is going to cost you over time? How can compound interest help your savings grow faster? When you hear on the news that the Bank of Canada interest rate is changing, what does that mean? We have some resources you can check out to start building your knowledge base:

Learn more about how interest rates work and how they affect you

6. Talk to your family about money

Many people with healthy money habits say that their parents taught them about the importance of saving when they were young. So if you have kids, talk to them about managing money.

Also, just talk about money in general! The idea that money-talk is taboo means that many people feel uncomfortable, even ashamed, when it comes to learning about and managing finances. This is can be really damaging and stressful for people dealing with financial problems - so be part of the solution and start talking more openly about money.

7. Ask for advice!

Financial advisor - it’s right there in the title - someone whose job it is to talk to you about money so that you feel comfortable and well-informed. So if you have questions, goals you want help planning for, or worries, talk to an expert! There are no stupid questions.

Learn more about saving

Learn how to budget in 6 steps
Saving in your 20s, 30s, 40s and beyond
What's a pre-authorized contribution (PAC) plan?