One thing that we don't learn in school is how to properly manage our finances. Whether you are just graduating from High School getting ready to go to University, or you just finished a 4-5 year long degree, you're finances are something that you should start paying attention to (the earlier the better). Through extensive research, self help books and a frugal mother that helped me keep my finances in check, I have personally been able to avoid many unfortunate situations when it comes to money. Here are 5 basic things you should know about managing your finances.

1. CREATE A BUDGET 

The first thing you should do is make a list of all of your monthly expenses. These are all of the monthly bills that you have to pay on a re-occurring basis. This includes: rent, utilities, phone and internet bills, student loan, groceries, gas, car payments... Your list may differ depending on what you need to pay for. The point is, have a basic understanding of what designated areas your money needs to go to. Every month you'll know that you need X amount for groceries and you'll know to have it readily available.  Keeping track of where you're money needs to go makes it easier to not overspend. Periodically check in with your goals to make sure you're staying on track. Each pay-check, set aside the amounts you need for each necessity and then you can divide the rest for miscellaneous expenses. 

2. HAVE MULTIPLE ACCOUNTS

It's a good idea to have multiple bank accounts. There are various accounts types offered by different institutions that will cater to your specific needs. Some accounts (for example TFSA savings accounts) have great compounding interest rates that helps you make money while storing your funds in the bank, others give cash back rewards for each transaction you make. Step into a bank and talk with a specialist about options that are available to you that suit your lifestyle. 

On that note, having multiple accounts is very beneficial for other reasons. If you know anything about investments, it's always a good idea to spread out your funds. This is another way to keep track of the money you have, especially if you're saving up for something. For example, you might want to have a designated account for daily expenses like coffee, or lunch, and a separate account for saving for that trip you want to take. Having multiple accounts with different banks as well, makes sure that you're never in a situation where your card declines and you have to wait on the phone for 45 minutes to speak with a specialist. If one card with a specific bank is not working, you know that you have another card with a different bank to carry you over until it's convenient for you to see what's going on with that blocked account. Just remember not to wait too long. Sort out the blocked account as fast as possible to have more options available to you.

3. GET A CREDIT CARD 

Some people have mixed feelings about credit cards. It is a piece of plastic that can get you into a lot of trouble, but having it in this day and age is necessary. The trick is knowing how to use it properly. A rule of thumb: a credit card should never be your main means to make purchases. It is a loan, it is debt - not cash. Never spend more than you can immediately pay down. This goes hand-in-hand with living within (or even below) your means. The reason you want to get a credit card is because it builds your credit history. This will help you later on applying for a loan, leasing a car, or getting a mortgage. Your credit history is what banks look at when deciding if you are a reliable risk to invest in. This is built by your history of paying your credit cards and other bills on time and in full. 

4. BUILD AN EMERGENCY SAVINGS FUND

Regardless of how much you are currently making at your job, you want to set aside some funds for an unexpected emergency. Life has a way of taking a turn for the worst when you least expect it, so you want to have a good amount of cushion funds saved up to lean on when you need to. A good rule of thumb is to save up at least 6 months worth of savings to cover all your expenses should you lose you job. Once that is done, you can start saving for other designated purposes like a trip for example. The point is to develop of decent amount of savings, and set it aside in case of an emergency.

5. PAY OFF YOUR LOANS

As a university graduate, I know a thing or two about loans. From credit cards, to OSAP and line of credits, it can be hard to manage all of these all at once. But it is necessary to tackle your loans as fast as possible. Before taking on other debt, focus on clearing the amount you already owe.

You'll want to start off paying down a bit more than the minimum on everything. Single out the loan that has the highest interest. Paying the minimum does nothing but cover the interest, at best. Contribute the most to that loan to effectively eat away at the principle (the loan itself). Do this while still paying just over the minimum on all other debt. When that high interest loan is paid off, use those allotted funds to pay down the next loan with the highest interest. Do this until all of your debt is paid down. It may be tempting to start spending once one loan is under control, but it will benefit you in the long run getting rid of any debt you have before spending.

xoxo