That doesn't mean it's too late if you're already in your 30s or even into your 40s because money is something everyone deals with on a daily basis.
Now, let's get into these personal finance lessons from Narcity's Money Team!
Open accounts like a TFSA or RRSP to save money
Senior Money Creator Lisa Belmonte shared that you shouldn't rely on the standard chequing and savings accounts that come with your bank account to save money.
While you probably earn interest on those accounts, you could put your money to better us by opening accounts like a Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP) to save for major purchases, unexpected expenses and retirement.
Canada's TFSA is a way for those who are 18 years of age and older with a valid social insurance number to set money aside tax-free throughout their life.
Contributions made to a TFSA and any income earned in the account are generally tax-free even when money is withdrawn.
Everyone has a TFSA contribution room — the maximum amount that you can contribute each year — and it's a total of all the TFSA dollar limit of the current year, any unused TFSA contribution room from previous years, and any withdrawals made from the TFSA in the previous year.
An RRSP is a retirement savings plan that you set up through a financial institution like a bank, credit union, trust or insurance company and contributions are made by you or your spouse or common-law partner.
Any income you earn in an RRSP is usually exempt from being taxed as long as the funds remain in the plan. You typically have to pay tax when you receive payments from the plan.
Generally, you can contribute to your RRSP until December 31 the year you turn 71 years old.
Plan for big purchases way in advance
If you think that you'll buy a house, get married or make another big purchase someday, you should start thinking about how you'll save and pay for it long before you actually have to put money down.
"By the time I got to buying my own home, I realized I had missed several years of easy savings plans or first home supports I could have been making use of for longer that would have cost me very little at the time," Senior Editor Helena Hanson said.
Currently, the government of Canada offers home-buying programs and incentives for homebuyers which include:
- the home buyers' amount — a non-refundable tax credit of up to $1,500
- the First-Time Home Buyer Incentive — 5% or 10% of your home's purchase price for a down payment
- the First Home Savings Account — save up to $40,000 tax-free to buy a home with an annual contribution limit of $8,000
"When I got engaged, I wished I'd been putting a little bit of money aside for longer so that I had more savings for the big day," Hanson continued. "I didn't want a super long engagement so I should have started putting money aside a bit earlier."
Even if you don't end up buying a house or marrying your partner, at least you've been saving money.
Keep receipts for things you can claim on your taxes
Another money lesson that you should know about is keeping receipts and records for expenses you can claim on your taxes each year.
"This was especially true when I had an agent and was going for auditions as an actor," Money Creator Patrick Gilson shared. "I could've written off acting classes, TTC fares, movie tickets, Fringe Festival tickets, and the list goes on."
There are so many deductions, credits and expenses that you can claim on your tax return to help reduce the amount of tax you pay.
Some of those are child care expenses, moving expenses, home accessibility expenses, adoption expenses, tuition and textbook amounts, charitable donations, the Canada training credit, and the eligible educator school supply tax credit.
Limit how often you treat yourself with purchases
"Whenever I thought I deserved a treat — like if I had a bad day, or got some good news — I would spend money as a reward to cheer me up," Hanson said.
That would include splurging on a new handbag or a designer item.
"But I realized I was 'treating myself' a lot and then actually causing myself stress by overspending," she continued.
"Now, I still occasionally buy myself treats now and again but I try and prioritize cheaper things that feel just as good — like a bubble bath or a face mask or takeout."
Of course, there are also ways you can treat yourself without spending extra money.
You could be a tourist in your town for a day, have a movie night at home, or take a day off from errands, chores and other responsibilities.
Plan your debt repayment
If you have debt, whether it be on your credit card or student loans that need to be repaid, you've probably found yourself stressing about it.
"Having debt is normal. You don't have to be debt-free to be able to be an adult, make big purchases or start saving for your future," Money Editor Stuart McGinn shared.
So, he said that one of the biggest money lessons you should know about is to have a plan to pay off your debt and then stop worrying about it.
You're definitely not the only person who has debt and you should give yourself a little grace!
Keep track of your credit score
Another money lesson that everybody should know is staying on top of your credit score, according to Belmonte.
Your credit score — even if you don't know what it is — can have an impact on purchases like a car or a house, approval for new accounts, the interest rate you get on loans, and more.
Even if you make the minimum payments on revolving credit like a credit card or line of credit, that won't improve your credit score because you're not actually paying off the principal balance.
It would be more difficult to get a credit score that's higher than average in that case because you're pretty much just paying off the interest.
According to Equifax, credit score ranges are typically:
- 300 to 579 = poor
- 580 to 669 = fair
- 670 to 739 = good
- 740 to 799 = very good
- 800 to 850 = excellent
Don't think having no credit is better than having a bad credit score though — that's something Belmonte's sister, who's a former banking officer, told her that was a game changer.
For example, if you try to get a mortgage without having a credit history, you could get denied because a bank won't know if you're reliable to make payments and you could be considered a risky borrower.
Think twice before borrowing from or lending money to friends and family
Borrowing money from friends or family might seem like an easier route than getting a loan from a bank whenever you need cash.
You should probably think twice before going through with it, according to Associate Director of Editorial Alshaar Khan.
"Money can make a dent in the strongest of relationships," Khan said. "So, communicate clear expectations every time you're getting into one of these situations."
That also goes for lending money to family or friends.
Consider getting a credit card with perks like cashback
Another money lesson that everybody should know about is getting a credit card that has perks like cashback.
"I have a great money-back credit card that usually pays me back around $1,500 per year," McGinn revealed. "I get that money back monthly and it goes straight into savings."
Creditcardgenius recently revealed the best credit cards in Canada for 2023 which include the American Express Cobalt Card, SimplyCash Preferred Card from American Express and American Express Platinum Card.
Some credit cards can have high annual fees so it's important to figure out how much you're willing to spend and if the benefit you get from perks — like cashback and travel — outweighs the cost of an annual fee.
Hopefully these personal finance and money management lessons can help you!
This article's cover image was used for illustrative purposes only.
Planning for retirement now means you can relax about the future. New Africa | Adobe Stock