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Live Below Your Means: Top Financial Tips for 20-somethings from RBC

Owning a home and reducing debt are the top financial priorities for young Canadians

TORONTO, April 23, 2012 — When it comes to managing cash flow, or lack thereof, today's 20-somethings have a lot to think about. Competing priorities can include paying down student loans, budgeting, saving for the future and managing everyday expenses.

The top three most important financial priorities for Canadians between the ages of 18 to 34, according to a recent RBC poll, include: owning a home (49 per cent), reducing or eliminating debt through regular payments (48 per cent), and general savings for a rainy day/emergency fund (39 per cent).

"Establishing financial independence is a marathon not a sprint," said Melissa Jarman, director, Student Banking, RBC. "Whether the priority is paying down debt or saving for a house, making a few smart changes and speaking with an expert can help you balance competing demands and achieve your financial goals."

Jarman offers five financial tips for 20-somethings:

  1. Live below your means: The key is to live on less than you earn. Leave yourself some wiggle room so you don't spend up to or above your limit. On your next pay cheque, try to save more and spend less. Aim to save between three to 10 per cent of what you earn to ensure your savings grow year over year.
  2. Fatten your piggy bank: Save, even if it's just a few dollars at a time. When you're getting established in your career, paying down student debt and perhaps planning major purchases such as a car or first home, saving can be especially difficult. The trick is to incorporate savings into your budget before you get accustomed to spending it every month.
  3. Use your emergency funds for emergencies only: As a general rule of thumb, an emergency fund should be about three times your monthly expenses if you are single, and six times your monthly expenses if you are married or have children. Opening a high-interest savings account is a good option because you will earn money through interest.
  4. "D" is for discipline not debt: Consider putting together a debt repayment strategy. Organize your debt in order of interest rates and pay off the debt with the highest interest rates first, or consider consolidating all of your loans under one umbrella, with a lower interest rate if possible. Make your payments on time and, when you can, pay more than the minimum payment. Missing payments can hurt your credit score and should be avoided at all costs.
  5. Rethink your spending: Let's say that, on average, you spend $10 a day on lunch. That's $50 a week and $2,600 a year. If you earn $30,000 a year, for example, you would save up to nine per cent of your salary by preparing lunch at home, leaving you more money towards a rainy day fund or other savings such as an RRSP (Registered Retirement Savings Plan) or TFSA (Tax-Free Savings Account). It's important to take control and identify all of your expenses and assess how much you're actually spending. Tools such as RBC's myFinanceTracker can help put you in the driver's seat when tracking and managing your spending.

About RBC's financial planning advice, resources and interactive tools

RBC's Better Student Life website offers advice and tools for students. The RBC Advice Centre offers free online advice, resources and tools regarding RRSPs - including the RSP-Matic® Savings Calculator and updates on the federal government's RRSP Home Buyers' Plan. Whether Canadians want to save and invest, buy their first home, get more from their day-to-day banking, protect what's important, or take care of their businesses, the RBC Advice Centre can help answer their questions. Interactive tools and calculators provide customized information covering many facets of personal finance, including the Debt Reduction Plan and the Debt Consolidation Calculator. With the guidance of RBC advisors who are available to chat live, Canadians have access to free, no-obligation professional advice about RBC products and services and personalized one-on-one service. Further information is available at In addition, RBC's myFinanceTracker, a comprehensive online financial management tool, offers all personal RBC online banking clients the ability, at no cost, to create a set budget and track their spending habits and to access the new myTax Centre, to help manage and plan their taxes.

About the RBC Poll

This survey was conducted by Ipsos Reid between October 24 and November 15, 2011 via a random sample of 1,224 adults in the general population (285 respondents aged 18 to 34). The results are based on samples where quota sampling and weighting are employed to balance demographics and ensure that the sample's composition reflects that of the actual population according to Census data. Quota samples with weighting from the Ipsos online panel provide results that are intended to approximate a probability sample. A weighted probability sample of 1,224 Canadian respondents, with 100 per cent response rate, would have an estimated margin of error of ±3 per cent, 19 times out of 20.

For more information, please contact:

Jill Quinn, RBC Corporate Communications, (416) 313-8121
Suzanne Willers, RBC Corporate Communications, (416) 974-2727