If you’re Canadian, chances are you’ve had thoughts like these: Why is my bank balance always so close to zero? If I could only get out of debt, I could save properly for retirement. I wish I made more money!

The good news is that the real issue isn’t your income – it’s how you think. That puts you in charge. If getting out of debt, saving for a home, or funding your retirement sound like pipe dreams, you may need to do a better job of controlling your cash flow.

This problem isn’t isolated to low-income earners, either. Did you know that the more you earn, the higher your debt is likely to be?

Stats Canada reported that households earning at least $100,000 had an average debt of $172,400. Compare that to households earning between $50,000 and $100,000, which had an average debt of $95,400. More income, more debt.

Plan ahead

The fact that many Canadians are in debt is not news. Maybe you feel better because most of your friends are in debt too. If everybody has the same problem, it must be normal, right?

If you don’t have a plan to pay off your debt, you won’t get ahead. High earners assume they’ll be able to pay off their debts, so they get into debt without considering the long-term results.

If you have $15,000 of credit card debt at 19% annual interest rate, and you pay $500 each month, it will take you just over 3 ½ years to pay off the debt completely. And you will incur over $5,500 dollars in interest.

That example was for a $15,000 debt, but the average high earner’s household debt is often 10 times that amount.

So, what should you do? First and foremost, you must change your thinking about debt. It’s easy to fall into the trap of paying for all your bills with credit cards or lines of credit. But you should take every opportunity to get rid of your debts, especially those with high interest rates, as quickly as possible. An accountant can help you create an action plan.

A financial plan is complicated

There are so many ways to pay your bills, we rarely think about actual dollars. We pay with a credit card number online, we tap, insert, or swipe at stores, payments are taken from our bank accounts without any intervention from us once set up. We can even pay for things through our cell phones. Money comes in and money goes out.

Keeping on top of it all seems like a lot of work.

If you are struggling to get ahead, knowing how much you are spending and where you are spending it, is important to getting ahead. Learning cash flow budgeting can help you get there.

One thing to keep in mind: many of the people offering advice on social media are not true financial gurus. You work hard and deserve better than that. A professional can help you create a cash flow budget that helps you focus on your spending and identifies the things that are important to you.

Creating a cash flow roadmap



Don’t get caught up in comparing your lifestyle. No one can have everything they want, but with planning you can achieve your goals.

Many people associate a cash flow planning with rigid budgeting. They believe that planning is about allotting money and not spending a penny more than the number on the spreadsheet. In truth, a cash flow plan is like having a map of where you are trying to get to.

Cash flow budgeting is the goal. As a map it shows you where you are now and what way you need to go to get to your destination. It’s about the normal expenses you have and how much you can put aside for your trip next summer. It’s about deciding if the kids can do one sport or two, finding a way to help your parents, or setting your children up for post-secondary education.

If you are in debt, plan the steps you need to take to get to your destination. There may be detours, and that’s OK. Your plan maps out the action steps, and allows you to keep track of how you’re doing.

Having that map gives you confidence, because you know where you want to go and you can see the path for getting there.

As hard as it can be to accept, debt is not a result of not having enough money – it’s the result of spending more than you have. And if you want to change that, it comes down to your mindset.

Start today

Financial freedom and peace of mind are possible

Luxury is not a need

Successful people plan how they spending and save

Successful people identify what’s important to them and are willing to make trade-offs

A cash flow plan is a roadmap, not a rule book

I hope this article has been helpful and provided some practical advice on how you can achieve financial success. If you would like to get in touch and discuss how I can help you create a cash flow roadmap, please send me a message.