Many Canadians encounter financial issues, and it can be a difficult thing to open up about. But it’s always a good idea to discuss any financial difficulties with your bank as soon as possible. The earlier they understand your situation, the more options could be available to you. If you still feel overwhelmed, especially when it comes to paying down debt, and feel like there’s no way out, there are other services available as well. Here are a few examples:
Credit counsellors
If you’re having trouble paying back your debt or keeping up with your payments, you may want to talk to a credit counsellor. Credit counsellors provide advice and education on managing debt, budgeting and improving credit. There are credit counselling services available from both not-for-profit organizations and for-profit companies.
Simply talking to a counsellor won’t affect your credit score. A credit counselling agency can provide a range of services, such as one-on-one counselling, group courses, tips and seminars, and debt management plans.
It’s a good idea to do your research to find a trustworthy organization and a qualified counsellor. Make sure you know what services they offer and how much they cost. You can also check if an agency is in good standing with provincial or national regulators.
Debt consolidation companies
This type of service offers loans to combine multiple debts into a single payment. This may help you simplify your debt management and reduce your monthly payments. Different companies offer debt consolidation products or services. The regulation of debt consolidation companies varies across provinces and territories. You can check with the Better Business Bureau if you’re unsure about a company’s reputation.
It’s important to note that certain debt consolidation options may have higher interest rates than your current debts. Be careful and shop around to find the lowest rate.
Licensed Insolvency Trustees
Licensed Insolvency Trustees (LITs) are federally regulated professionals. They can provide you with advice and services if you have debt problems. LITs may help you make informed choices to deal with your financial difficulties. They’re the only professionals authorized to administer consumer proposals and bankruptcies.
The bottom line when choosing financial services is to shop around, do your research and ask questions when you don’t understand something. You can consult resources, like those offered by the Financial Consumer Agency of Canada, which has information and tools that can help you manage your debt. Learn more at canada.ca/money.
Tips To Get Your Finances On Track
A new year is the perfect time to get a foothold on your finances. Setting and achieving even the smallest financial goal is good practice for reaching the bigger goals we all aspire to like a down payment on a home, paying off debt, and living comfortably in our retirement.
Make a budget
A budget can help you to steer clear of impulse purchases and cut down on unnecessary expenses. It gives each dollar a purpose.
There are many ways to construct a budget. Start simple with a basic spreadsheet or budgeting app, one that feels easy and intuitive to you. The easier the budgeting tool feels to use, the more likely you’ll stick with it.
Most tools ask that you look at your spending first to figure out which expenses are fixed (such as mortgage, rent, car payments, your phone bill) and which are variable. Typically, variable expenses are ones you might be able to reduce or cut out altogether, so there’s money available to reach other goals.
Budgeting pros recommend putting into practice the 50-30-20 rule. Here, 50 per cent of your income is spent on things you need (like housing, groceries and utilities), 30 per cent is set aside for wants (a new pair of sneakers or a night out) and 20 per cent is directed into your savings accounts or investments.
A budget is more than a plan to manage your money, it’s also an accountability tool. If you’re new to budgeting, keep in mind that your budget isn’t set in stone. It may need some tweaks to account for fluctuations in spending or income. Regularly reviewing the budget will help you to make adjustments according to your unique needs and financial picture.
Reduce debt
In the third quarter of 2025, Canadians were carrying an average of $27,100 in non-mortgage debt, bringing the total to $673 billion – an increase of 4.3 per cent year-over-year. Incorporating debt payments as part of your budget is a key step on the path to increased savings and financial security.
Many Canadians have debt tied to multiple credit cards, student loan payments, car payments, or lines of credit. Some forms of debt could be integrated into a single consolidation loan, often at lower interest rates. Speak to a financial advisor to learn more.
Another key factor in reducing debt is avoiding adding any new debt to the amount you’re already carrying. Having a budget helps set parameters around spending and prioritize debt payoff.
Build an emergency fund
Unexpected costs like car repairs or vet bills can crop up and throw you off the path towards your financial goals. That’s why it’s important to have an emergency fund – even a small one – to fall back on. It helps you to avoid charging the expense to a credit card or taking it out of savings.
Ideally, an emergency fund should cover your basic living expenses for three to six months. If you’re starting from zero, this goal can seem more than a little daunting. Start small, for example to save the equivalent of one pay cheque. Incorporate building an emergency fund into your budget so that it becomes part of your fixed expenses.
It’s also a good idea to keep an emergency fund in a separate account, ideally one that pays a higher interest rate than an everyday banking account. You could even automate transfers so that you’re saving for emergencies without having to think about it.
Maximize your RRSP contribution
An RRSP (Registered Retirement Savings Plan) is a tax-exempt fund designed to help save for the future while also reducing the amount of tax you pay in the present. Your annual contributions are tax-deductible, so it’s a smart strategy to contribute each year.
Your RRSP contribution room is typically 18 per cent of your earned income or a maximum of $32,490 for 2025. If your employer makes contributions to a pension or retirement plan on your behalf, that must be subtracted from the amount you contribute on your own. If you haven’t been contributing to your RRSP, you probably have an unused amount from the year or years before. You can check your most recent CRA Notice of Assessment to find how much you contribution room is available.
Tips for sticking with your financial goals
Deciding to take control of your finances and work towards your goals is step one in the process of achieving them. Step two is sticking to the plan! Here’s how to stay on track and save:
- Set SMART goals. These are goals that are specific, measurable, achievable, relevant and time-bound (you guessed it, it’s an acronym). A SMART goal looks like this: “By December of 2026 I will have saved $2,000 for the cross-country road trip I plan to take the following year” or “By April, I will have added $500 towards my emergency fund.” Prioritize the SMART goals that will have the biggest impact on your financial health.
- Don’t allow yourself to be intimidated by the larger financial goals you’ve set for yourself like paying down debt or saving for retirement. Break these big goals down into smaller steps or amounts so that they feel manageable – and don’t forget to acknowledge each milestone achieved.
- Keep track of your progress. Using a simple spreadsheet or savings app will let you see how far you’ve come and how close you are to your goal. There’s no better motivator to keep saving than to see those savings grow.
- Stay accountable. Keep using the budget you created to monitor and track your spending.
- Be flexible and adjust. If, for example, your income changes, alter your financial goals to align with this.
- Automate savings and investment contributions using the features available to you through your online banking – set it and forget it.
You’ve set your financial goals for a reason, each step is a win, and your efforts come with a big payoff. A financial advisor or insurance broker can guide you towards achieving these goals. Don’t hesitate to reach out and ask for their advice.
Sources:
News Canada
RBC Life Insurance
