5 Things you can do to Avoid Financial Problems Later
Here are five things you can do to avoid financial problems:
- Insure your salary.
- Live within your means.
- File your income tax return.
- Beware of what you hear or read.
- Do not hesitate to seek advice.
1. Insure your salary
Your biggest financial risk is losing your salary. You cannot predict an illness or an accident, but you can take out insurance in case it happens and prevents you from working. This is called a disability insurance or a salary insurance. Check with your employer: your group insurance may offer one!
The Québec Pension Plan, to which you contribute on every pay, offers you basic protection in the event of severe and permanent disability. This is what happens if your medical condition prevents you from doing any work on a full-time basis, forever! We say "basic" because this protection does not replace your entire salary, and it does not cover short-term disabilities, which are more common.
Example: you have a concussion and have to stop working for several weeks. You really should take out insurance for this type of situation. Therefore, you need to complete your protection in addition to the one offered by the Québec Pension Plan. Depending on your coverage, if your salary increases, you may also need to increase the amount of your insurance.
Consult the
Disability pension under the Québec Pension Plan web page for more information.
2. Live within your means
This means you must not spend more than you earn, or you risk getting into debt. There is no miracle solution. Advertisements like "buy now and pay later" can quickly lead to over-indebtedness! You are probably better off paying off your new television in full instead of in 24 instalments, in addition also to the interest that may be added to your payments.
3. File your income tax return
Your income tax return will help you avoid having to pay a tax debt you did not see coming. It will also allow you to put money into your registered retirement savings plan (RRSP) and defer part of the payment of your income taxes. You will see: it is important. We talk about it on the TFSA, FHSA or RRSP: why do you need one? web page. If you are entitled to the GST credit or solidarity tax credit, you must also file your income tax returns to receive them.
4. Beware of what you hear or read
There is a lot of information out there, and it can be hard to find reliable information. Always check with reputable sources, such as our website and those of the Autorité des marchés financiers,
ÉducÉpargne 
or financial institutions. It is also in your interest to develop reflexes to protect yourself from fraud and false promises of wealth. The Autorité des marchés financiers provides tips on its website to help you do so. You can also find out what recourse you have if you are a victim of fraud:
5. Do not hesitate to seek advice
It has been proven that having financial guidance pays off in the long run. An advisor can help you decide which is the best strategy between, for example, paying off your debts and putting money aside!
Two questions to ask yourself
Do you need to be an owner?
Buying a house or a condo is a nice project, but contrary to what you might think, it is not essential for your financial security. Yes, a property allows you to invest in an important long-term asset, but it also comes with a lot of expenses. There are other ways to do this, for example, by acting as if you were paying the expenses associated with a home but saving that money instead. Over time, you will have accumulated a significant asset, which could ultimately serve as your down payment later on!
Is getting around too expensive?
For a lot of people, transportation is the second most important expense category, above food. If you need a car, take the time to calculate the costs of financing it, insuring it, maintaining it and filling it with gas. You may be able to make choices to reduce these costs, such as living in a place where you do not always need a car to get around, buying a used car instead of a new one, or using other means of transportation. You may have to sacrifice a little comfort, but depending on your situation, it may be worth thinking about.