With so many priorities competing for your attention, it can be a challenge finding time to look after your financial well-being.

As we all know, when our finances are in order, we feel better and more confident about the future and our ability to handle life’s unexpected challenges.

Starting to think about all the areas of your finances may seem daunting – so where do you even start?

Let’s simplify the review process by breaking it down into five key areas.

1. Establish a budget

By creating a budget to track your expenses, you’ll have greater control of your finances and a solid understanding of where all your money is going.

Here are two steps to help you establish a budget:

Step 1

Calculate the total income you’ll receive from all sources – for example, employment income, rental or investment income, support payments, pension etc.

Step 2

List all your expenses and divide them into two categories:

  • Non-discretionary, or mandatory costs, Such as mortgage payments, rent, hydro, etc.
  • Discretionary, or non-essential costs – If funds are remaining after you’ve accounted for all your non-discretionary costs, prioritize your discretionary costs based on what is most important to you.

There are many benefits to creating and maintaining a budget:

  • Allows you to objectively look at your need versus your wants
  • Helps you better meet short-term priorities, such as paying your monthly bills (like your mortgage, rent and utilities), while balancing expenses for the things you may want
  • Helps you achieve longer-term goals (like buying a car or home, saving for a child’s education or retirement)
  • Helps identify areas where you may be overspending and helps you reallocate these funds toward more important savings goals
  • Helps to create a more effective plan to pay off debts

Your budget can be as basic or detailed as you like – whichever works best for you. The important thing is to set up a budget and reassess it at least semi-annually to ensure it’s working to meet both your short- and long-term financial goals, or whenever you have a significant change in your income or expenses.

Try the Scotiabank Money Finder calculator

The Scotiabank Money Finder calculator will help you determine if you have additional funds available to put towards your financial goals by comparing your income to your expenses.

2. Pay down debt

Some Canadians may find themselves feeling the stress of new debt they’ve taken on or repayment of older debt. Creating a plan that lists each of your debts and how you will manage repayment is an important first step. Knowing what options are available to help you pay down your debt more quickly is also key to establishing a sense of control over your finances.

Here are some strategies to help you speed up your debt repayment:

Restructure your debt

Chances are you may be paying more interest than you need to, based on the types of debt you have. Restructuring your debt can lower your interest payments, freeing up much-needed cash to help you get debt-free faster. There are a few different ways to do this.

  • Switching to a lower interest-rate credit card: Many credit cards have high interest rates. If you have credit card debt, you might want to see if there are options available with a lower interest rate, as this could save you money.
  • Consolidating your debt: If you have multiple loans or credit cards, you may be able to combine them all under a new credit application to take advantage of a potentially lower annual interest rate and payment. This might be under a secured or unsecured line of credit or even a new loan. This way you’ll have one easy payment, which should alleviate a lot of stress.

Pick a debt-paying method

Consider one of these two methods to help pay down debt (but pick the one you feel will be faster or best suited to you).

  • The debt avalanche method: This method focuses on paying off the debt with the highest interest rate first. After that’s paid, you shift to the debt with the next highest interest rate and so on.
  • The debt snowball method: The goal is to start by paying off your smallest debt first. This can create a sense of accomplishment, so you can use that momentum to move on to the next debt. Many people find this method easier to stick to. Keep in mind, however, that you may end up paying more in interest depending on the amount of time it takes to pay off your larger debts with potentially higher interest rates.

How much of your pay should go towards debt payments?

This can vary, but a good place to start is to follow the 50/30/20 rule.

Pie chart: 50% Must-haves (rent, mortgage, utility bills, etc.); 30% Wants (meals out, treats, trips, etc.); 20% Paying down debt

If you are feeling overwhelmed with your debt, or want to learn more about options to pay off debt more effectively or quicker, schedule a meeting with a Scotiabank advisor to review your situation and help you find a solution that works best for you.

3. Start to save - it’s never too early 

Time is your biggest ally when it comes to saving. Once you start working and can set aside even a small amount each month, you can be well on your way to building savings for your short- and long-term financial goals. When it comes to saving for retirement, the earlier you start, the better off you’ll be because your money will have more time to benefit from compound growth.

As you set out on the path to saving and investing, you’ll need to determine which products and/or investment strategies are right for you and your financial situation.

What is compound interest?

Compound interest is a way of determining interest whereby the addition of interest over time is added to the principal amount. You not only earn interest on the principal amount, you also earn interest on your interest, and interest on that interest, and on and on. Saving over a longer period of time allows your money more time to grow and to benefit from compound interest.


Compound interest is the eighth wonder of the world.

Albert Einstein

To determine the most appropriate savings and investing options, begin by asking yourself these three key questions:

  • What are you saving or investing for?
  • What is your time horizon to reach your goal?
  • What is your risk tolerance?

Pre-Authorized Contributions – an easy and convenient way to build up your savings

When it comes to saving, it’s easy to get sidetracked. A Pre-Authorized Contribution (PAC) allows you to make saving priority number one by ensuring you automatically make contributions.

PACs provide a convenient and flexible way to build up your savings for short- and long-term goals. With a PAC, you choose the amount you want to contribute and how often – for example, weekly, biweekly or monthly. You can adjust the amount and frequency at any point in time. Even small amounts saved regularly can add up over time – and you can get started with as little as $25 per month.

A PAC is also an effective way to schedule automatic deposits to an emergency fund. If you encounter an unexpected expense, financial setback or job loss, you can access your emergency fund and won’t need to tap your savings or borrow from your credit card. A rule of thumb is to save the equivalent of three to six months of living expenses in your emergency fund.

Don't set it and forget it

The following example shows how setting up a PAC - and then increasing your contribution even a little each year - will allow you to grow your savings so much more.

In the graph below we look at the individual who contributes $200 monthly for 15 years versus the same individual increasing their monthly contribution by just $25 each year.

PAC contribution over 15 years

Graphic: $200 monthly: $53,181; $200 monthly plus - $25 increase each year: $93,713

Over a 15-year period the difference is over $40,000

For illustrative purposes only. The example uses a hypothetical rate of return of 5%, assumes reinvestment of all income, compound annually and does not include the transaction costs, fees or taxes. The example does not reflect actual results or the returns of future value of an actual invetment.

To see how quickly your savings can grow, try out the interactive PAC video


A Scotiabank advisor can help you build a personalized saving strategy and select financial products that work best for you – taking into consideration your personal circumstances, time horizon and risk tolerance. Learn about our saving and investing products:

4. Put a financial plan in place

Think of a financial plan as your personal roadmap – it not only encompasses longer-term goals, such as saving for your children’s education and retirement planning, but also includes shorter-term goals, such as saving for a car or a home.

A sound financial plan focuses on your current needs and future goals and puts strategies in place to help you achieve them. It will give you better control of your finances and peace of mind, knowing there’s a strategy in place to achieve your financial goals. During trying times, having a financial plan in place will help you to avoid reacting hastily and making emotional decisions. Once you have a plan in place, it’s important to revisit your plan regularly to confirm that you are still on track to meet your goals, or if adjustments should be made.

While everyone’s plan will be different, a financial plan is designed to help answer three fundamental questions:

  • Where are you now financially?
  • Where would you like to go?
  • And how will you get there?

A comprehensive financial plan will also address your estate-planning needs, which includes tasks like preparing a will, establishing a Power of Attorney and implementing tax-planning strategies to help you pass assets onto the next generation with minimal tax consequences.

Our knowledgeable Scotiabank advisors – in conjunction with financial planning tools and products, and access to resources and specialists across the bank – can help you create a financial plan that’s right for you.

Check out Why financial advice is so important to learn more about the benefits of a working with a financial advisor and how research has shown that households working with a financial advisor accumulate more assets than those that don’t.

5. Protect yourself and your family

We work hard to build a happy, safe and prosperous life for ourselves and our families. Sometimes along the way we encounter unexpected events that could seriously affect our ability to maintain our standard of living and to provide for our loved ones.

A financial plan that includes insurance can help keep your financial goals on track and provide your family with financial security, in the event of challenges like a job loss, disability, illness, or even loss of life.

Some questions to consider:

What if…
  • you had to stop working because of a sudden disability or critical illness? Could you continue to meet your mortgage and line of credit payments?
  • you unexpectedly passed away? Would your family be able to pay your outstanding debts, continue with their current way of life and be financially secure moving forward?

A variety of insurance coverage options may be available through your employer, private insurance, government benefits or your financial institution. The key is to learn about the coverage that is available and to determine what is best for your financial situation and will provide you and your family with the protection they need.

To learn about the creditor insurance protection coverage options available through Scotiabank to insure your Scotiabank borrowing products such as your mortgage or line of credit, speak with a Scotiabank advisor or visit scotiabank.com/insurance.

Did you know?

Many Canadians may not be financially prepared if something unforeseen were to happen

In fact: 

50% - of Canadians don't own life insurance coverage1

71% - Canadians who have credit protection insurance on a mortgage and/or home equity line of credit said that without the insurance, they do not know how they would be able to cope should an unexpected life event negatively impact then financially2

Losing sleep over your investment planning? We can help. Book an appointment with a Scotia advisor 

This article originally appeared in Advice Matters.