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Millennial Savings Guide


Millennial Savings Guide


Personal financial management is part of this whole “adulting” thing. Some people find it fun, while others find it boring. Regardless of your stance on Personal Financial Management, its always important to continuously monitor your finances.

Losing track of your finances can lead to undesirable consequences, such as maxed out credit cards, or not having enough money to pay your bills. According to the Financial Post, the average Canadian credit card interest rate is 14.3% annually. In other words, you would be paying $143 (annually) for every $1000, if it is not paid off before the grace period. Keep in mind, some credit cards charge north of 20%, depending on the rewards.

  1. Budgeting

It can be extremely easy to fall into the debt spiral, if you go on a tapping spree with your debit/credit card, or Apple Pay. Before you spend or go shopping, keep your budget in mind – how much can you really afford?

Some people purposely use cash only, as it makes it easier for them to spend within their means (and avoid maxing out on their credit cards, which can be tempting). A budget doesn’t have to be complicating – the simpler it is, the better. When budgeting, just keep two things in mind: your cash inflows, and your cash outflows.

  1. Automated Savings

Automated savings are useful tools that literally force you to save a portion of your paycheque. Automated savings is basically setting up an automatic transfer to your savings account when your direct deposit comes in.

Planning on going to the OVO Fest, to see Drake (Toronto’s 6ix God)? Automatic Savings would be a great tool. According to the Toronto Star, OVO Tickets can cost $174 for front row seating. Let’s say, if the OVO fest tickets go on sale in 4 months, setting an automatic savings of $21.75 bi-weekly will get you to your goal of $174.

Keep in mind, take advantage of Automated Savings for other purposes, such as Retirement, and saving up for your first home. Automated savings are a great tool that help you stick to your budget, and can help you meet short and long term goals.

  1. Debt management

Some people are completely against debt. Some would say its best to have no debt at all and pay everything with cash. Yes, having no debt would be nice. However, it does have the advantage of allowing you to leverage on your net-worth.

Let’s use a car purchase as an example – should you buy on cash, or get a loan? Let’s say, you were to buy the redesigned, 2016 Honda Civic for $16,155 (base model). To keep the calculation simple, lets exclude other costs, such as taxes, registration fees, etc.

One option is to pay the car upfront, for $16,155.

The second option would be to take a loan out for the car. Interest rates vary, some dealerships offer 0% financing while others may charge north of 2%. At 2.99%, financing the Honda Civic would cost approximately $163.27 bi-weekly (48 month term, with no down payment).

Keep in mind, cars are a depreciating asset. The best option would be to go with the second option, as you would be able to invest the $16,155 into an appreciating asset, such as a house down payment, or even stocks, mutual funds, and Guaranteed Investment Certificates. In other words, you would be making interest payments of 2.99% on the $16,155, while you’re you would have the potential to earn the average long term return of 9.8% from a mutual fund that follows the S&P 500 index.

As seen in this article, not purchasing a car upfront, and investing the money instead is a great net-worth builder.


Managing your personal finances shouldn’t be complicating. Keep it simple to three factors: cash inflow, cash outflows, and your goals (such as saving up for a down-payment). Keep these three factors in mind, and it’ll make it much easier to create a budget, and have a good understanding of how much you can save, and how much debt you an afford. As David Chilton would say, start saving early, and live within your means.

Writer: Jelani Smith 

Disclaimer: All investing can potentially be risky. Investing or borrowing can lead into financial losses. All content on Bay Street Blog are solely for educational purposes. All other information are obtained from credible and authoritative references. Bay Street Blog is not responsible for any financial losses from the information provided. When investing or borrowing, always consult with an industry professional.

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