Managing your finances

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Learn how to responsibly manage your money and save for the future.

Key points

  • Set up a bank account so that you have a place to save and store your money.
  • The goal to managing money is to balance your income and expenses so that you have some money left over to put away in savings.
  • Keep track of where you spend your money so that you can adjust your expenses or income as needed.
  • Credit cards can be useful for building a credit score. It is important to use them responsibly by paying your whole bill each month.

Learning to manage your own finances

Having your own money and managing your finances are big steps towards independence. You may feel excited about being more self-sufficient or a bit nervous about the responsibility. Or, you may feel a bit of both! This page contains some helpful hints about managing your finances.

Bank accounts

If you don’t have a bank account yet, talk to your parents or caregivers about opening one. Setting up a bank account is easy. You can set up an account in person or online. You will be able to deposit your money into the bank and then use a bank card to withdraw it or make purchases. The bank representative will be able to answer any questions you might have about your account.

These days, you can either go to the bank in person, check your account online or use an app on your phone to see details about your account (such as the balance). Your banking information is private, so do not share this with anyone who is not directly involved in your banking.

Managing money

Being able to manage your money is an important skill that will benefit you throughout your life. It is best to learn money management skills early, even if you are only working with small amounts.

Here are some basics to get you started.

  • Your income is the money that you receive.
  • Your expenses are the amount that you pay out.

The goal to managing money is to balance your income and expenses so that you have some money left over to put away in savings.

How do you achieve this balance? Create a budget! A budget helps you organize and keep track of your income and your expenses.

Write down the sources and amounts of income and then add them all up. Do the same with your expenses.

Find out where you spend your money

To do this, keep track for one or two months of exactly where every penny you have comes from and where it goes. Most people use a paper or their computer to track this. If you make a couple of columns (date, money in, money out, reason), it becomes fairly easy to look back and see where your money went.

A lot of people find it helpful to make a list of expenses and then decide what percent or portion of money goes towards each one. Make sure you have a category for savings! If you owe someone money, have a category for “debt”. Then figure out how much of your money in real dollars will go to each category.

Consider the two main categories of expenses

Most people have two general categories of expenses: fixed expenses (costs that are set, such as rent, cell phone, internet and utility bills) and variable expenses (costs that you can change, such as how much you spend on food or clothes). If you’re still living at home, you may only have variable expenses that are mostly related to your social life.

Say you work part-time and you get a total of $300 each month between pay and your allowance. Your list might look like this.

CategoryPortion of incomeAmount
Savings (for example for college/university)35%105
Going out with friends20%60
Clothing and hair20%60
Cell phone10%30
Debt (owe sister $100)10%30
Total 100% 300

Make sure the numbers add up (the columns to 100%, the dollars to the amount of money you bring in). As your situation changes, for example when you move out on your own or when you have paid off your debt, you can change the numbers to reflect the changes in your life.

Tip: This is easiest if you keep receipts or make a list that you add to each day. You will be able to see how much you are spending and on what.

If you have more expenses than income, you will need to look at cutting down on your spending or increasing your income. The goal is to have more income than expenses. Practice saving for something you really want, like some clothes, tickets to an event, your education, or even a vacation!

Credit cards

Credit cards can be useful; but if you do not use credit cards responsibly, they can lead to financial trouble. Credit cards allow you to spend a certain amount of credit, which means borrowed money.

You get a bill each month that outlines how much of the credit you have spent and the amount you need to pay that month—your minimum payment. Using your credit card responsibly means paying your whole bill each month, not just the minimum payment.

Credit card companies make money by charging interest. When you leave money owing on your credit card, interest causes that amount to grow and you will end up paying the credit card company much more than you actually borrowed! Smart use of a credit card means knowing your budget and spending within it.

File your income tax

Even if you don’t earn any money, filing your income tax is a very good habit to develop. It’s also really easy to do when you aren’t earning an income! If you are filing in Canada, you will automatically become eligible for refunds from the government (for example a GST and/or HST rebate) at certain ages. However, you won’t get the money if you don't file.

Have a range of goals that help you decide where your money should go

Short-term goals can be anything that you want to do over the next year. Mid-term goals usually refer to something you would like over the next two to five years. Long-term goals are goals for when you finish your education and are working full-time. You can add these categories to your list now and watch over time as your savings grow.

Last updated: March 3rd 2021