Financially Speaking

Congratulations graduate, you’ve done it. You’ve earned your degree or diploma and now it’s time to get on with the rest of your life. Here are the five important financial steps you should take.

1. Manage your student loan

For the first six months, you don’t actually have to make a payment but interest will accrue. Find out what your payment will be and include it in your budget. More is better but make at least the minimum payment each month. If you are unable to make payments, contact the loan provider right away.

If you have a Canada Student loan, you may qualify for the Repayment Assistance Plan. If yours is a bank loan, you may be able to negotiate temporarily lowered payments.

2. Save for tomorrow with an RRSP

Consider putting the power of compounding to work for you by contributing to investments held in a Registered Retirement Savings Plan (RRSP) because investing even a small amount each month can build considerable wealth over the years. Plus contributions to RRSPs are deductible from your taxable income for each year in which contributions are claimed. Another RRSP plus: If you’re thinking about buying a home in the future, the federal Home Buyer’s Plan allows eligible individuals to withdraw up to $25,000 for a home purchase tax-free from their RRSP.

3. Save smart with a TFSA

Start a Tax-Free Savings Account (TFSA). It complements your RRSP because a TFSA investment grows tax-free. You can currently contribute up to $5,500 in a TFSA each year tax-free and get your money back out at any time, for any purpose, tax-free. However, there is no reduction to your taxable income for TFSA contributions.

4. Avoid high credit card debt

Credit card interest rates can be 20% or more so limit their use, try to pay the balance in full each month, and pay on time to avoid late fees and additional interest.

5. Develop a budget – and stick to it

Include all unavoidable expenses such as rent and utilities and be mindful of discretionary expenses, such as travel, that you can control.

By the way, it’s never too early to enhance these first five fiscal steps to your financial success with an overall financial plan that will help you meet your objectives. Talk to your professional advisor soon.