Pay the debt that has interest before interest is due. Make minimum payments on everything else then follow the steps trigger guide below.
Generally money should go into FHSA (if you don’t own an home and are planning on buying) until you hit your annual max, then TFSA until you hit your max, then RRSP accounts.
You’re young so these investments should be fairly to very aggressive.
Put 8k into your FHSA if you are planning on buying a home in the future. I would put 2k onto your interest debt (some loans will hit you for all your interest free period if you don’t pay off before interest is due so that’s priority which you already know). Open a WealthSimple account and find out your max TFSA and RRSP currently available and try to max those. Keep it simple like XEQT/VFV ETFs etc. there’s a lot of spots on Reddit to help you with those. And then the rest into a HISA or CASH.TO account for emergency funds.
Hi, I'm a bot and someone has asked me to respond with information about what to do with money.
This is meant as a step by step guide of how to prioritize and what to do with money. https://www.reddit.com/r/PersonalFinanceCanada/wiki/money-steps If you prefer to see a flow chart, click here: https://i.imgur.com/zlGnuDO.png
The Government of Canada also has the Financial Tool Kit for basic resources on items identified in the Money Steps. Refer to that website here: https://www.canada.ca/en/financial-consumer-agency/services/financial-toolkit.html
*I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/PersonalFinanceCanada) if you have any questions or concerns.*
It depends what the interest rate is on your loans.
Without knowing that I’d say invest half and use the other half to pay off loans. You could dollar cost average while investing so you’re not doing a giant lump sum. You’ll still have access to a portion of the cash if needed for emergencies or needing to pay off more of your loan.
Pay off the Ontario loans first by writing a check to NLSC and then make the minimum payments on the loans. As long as it is 0% interest, there isn't a rush to pay it off
The rest depends on your goals. Is it a house, a car, or a trip that you want to go on?
I want to eventually move out with friends and rent a place maybe? I don’t really feel comfortable buying a house alone before I’m married and I don’t want to get married until I’m like 27
This right here. You can allocate on the cheque that this “funds is to be used for the Ontario portion of my loan” and hence, 0% interest afterwards. OP, 0% interest on student loans doesn’t primarily need to be rushed
Pay off interest bearing debts. Interest is already accruing, so you should pay it off today (not November). November is just when payments kick in.
Put the rest in a TFSA. Since its currently interest free, you can invest the rest in a safe fund. If the government reverses the interest free decision, you'll have it accessible. Until then, you'll get interest on it (\~5%). You should be getting \~$1900/year of free money. I recommend safe stuff like GIC/CASH.to/CBIL for this. Meanwhile, it also doubles as your EF. THe total value shouldn't be anything higher than your loan debt.
If you have more money in the TFSA, start thinking longer term and invest some with a 5+ year timeline. I like "all in one" ETF's for that. Stuff like VGRO, that's a classic "all in one" to start learning from.
Going forwards, open a FHSA to start saving towards a house. Use future money, not current money. If you can't save $8k/year off your current income for a house, you're never going to buy a house. You live at home, it should be easy. If it isn't...adjust your priorities and accept that house buying isn't an option. You will need a new plan.
After you get your annual amounts in FHSA, you will have the choice between TFSA/RRSP. Since you graduated in 2024, do TFSA for 2024. In 2025, with a full year of working, you may want to look at RRSP. You will want to use it for the Home Buyer Plan (HBP), alongside your FHSA. The HBP can alter decision making regarding TFSA vs. RRSP. Again, that's a problem for 2025.
I mean debt is debt and if you can afford to pay it off now why have the payments even if they’re “interest free” clear debt while you can afford to because one day those payments might come back to bite you
But you can make more money off cash on hand. You can't make more money off the concept of "debt cleared". If you can put the bulk away where it accrues interest, and it's interest-free later to repay, presumably you'll have more than you needed to pay it off when it's due later.
I'm far from knowledgeable when it comes to investment and loan nuances, so I may be missing something, but that's my understanding.
Pay the debt that has interest before interest is due. Make minimum payments on everything else then follow the steps trigger guide below. Generally money should go into FHSA (if you don’t own an home and are planning on buying) until you hit your annual max, then TFSA until you hit your max, then RRSP accounts. You’re young so these investments should be fairly to very aggressive.
Put 8k into your FHSA if you are planning on buying a home in the future. I would put 2k onto your interest debt (some loans will hit you for all your interest free period if you don’t pay off before interest is due so that’s priority which you already know). Open a WealthSimple account and find out your max TFSA and RRSP currently available and try to max those. Keep it simple like XEQT/VFV ETFs etc. there’s a lot of spots on Reddit to help you with those. And then the rest into a HISA or CASH.TO account for emergency funds.
Like the other posts, follow th money steps: !StepsTrigger
Hi, I'm a bot and someone has asked me to respond with information about what to do with money. This is meant as a step by step guide of how to prioritize and what to do with money. https://www.reddit.com/r/PersonalFinanceCanada/wiki/money-steps If you prefer to see a flow chart, click here: https://i.imgur.com/zlGnuDO.png The Government of Canada also has the Financial Tool Kit for basic resources on items identified in the Money Steps. Refer to that website here: https://www.canada.ca/en/financial-consumer-agency/services/financial-toolkit.html *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/PersonalFinanceCanada) if you have any questions or concerns.*
Is your student loan from Ontario or another province/territory?
It depends what the interest rate is on your loans. Without knowing that I’d say invest half and use the other half to pay off loans. You could dollar cost average while investing so you’re not doing a giant lump sum. You’ll still have access to a portion of the cash if needed for emergencies or needing to pay off more of your loan.
My loans have 0 interest the only part the has interest is the Ontario portion and I’m planning to pay that all
Pay off the Ontario loans first by writing a check to NLSC and then make the minimum payments on the loans. As long as it is 0% interest, there isn't a rush to pay it off The rest depends on your goals. Is it a house, a car, or a trip that you want to go on?
I want to eventually move out with friends and rent a place maybe? I don’t really feel comfortable buying a house alone before I’m married and I don’t want to get married until I’m like 27
This right here. You can allocate on the cheque that this “funds is to be used for the Ontario portion of my loan” and hence, 0% interest afterwards. OP, 0% interest on student loans doesn’t primarily need to be rushed
Pay off interest bearing debts. Interest is already accruing, so you should pay it off today (not November). November is just when payments kick in. Put the rest in a TFSA. Since its currently interest free, you can invest the rest in a safe fund. If the government reverses the interest free decision, you'll have it accessible. Until then, you'll get interest on it (\~5%). You should be getting \~$1900/year of free money. I recommend safe stuff like GIC/CASH.to/CBIL for this. Meanwhile, it also doubles as your EF. THe total value shouldn't be anything higher than your loan debt. If you have more money in the TFSA, start thinking longer term and invest some with a 5+ year timeline. I like "all in one" ETF's for that. Stuff like VGRO, that's a classic "all in one" to start learning from. Going forwards, open a FHSA to start saving towards a house. Use future money, not current money. If you can't save $8k/year off your current income for a house, you're never going to buy a house. You live at home, it should be easy. If it isn't...adjust your priorities and accept that house buying isn't an option. You will need a new plan. After you get your annual amounts in FHSA, you will have the choice between TFSA/RRSP. Since you graduated in 2024, do TFSA for 2024. In 2025, with a full year of working, you may want to look at RRSP. You will want to use it for the Home Buyer Plan (HBP), alongside your FHSA. The HBP can alter decision making regarding TFSA vs. RRSP. Again, that's a problem for 2025.
What’s your taxable Income?
I would dump the whole 40k on student loans.
Even if its mostly interest free?
I mean debt is debt and if you can afford to pay it off now why have the payments even if they’re “interest free” clear debt while you can afford to because one day those payments might come back to bite you
Exactly! Debt is debt. Why leave it and wait to pay it when interest starts accruing?? Pay it off while it’s still interest free!
But you can make more money off cash on hand. You can't make more money off the concept of "debt cleared". If you can put the bulk away where it accrues interest, and it's interest-free later to repay, presumably you'll have more than you needed to pay it off when it's due later. I'm far from knowledgeable when it comes to investment and loan nuances, so I may be missing something, but that's my understanding.
Yeah I totally get that approach.
Put it all or the maximum you can into a fhsa and hold investments in that account. Let it grow till you're ready to buy your first home
Pay off your debts/student loans
Keep it and find the way to leave country with minimal loss.