It’s not fun being broke and it’s definitely not fun living paycheque to paycheque! Learning how to manage money wisely is a skill that should be taught in school. Unfortunately, most students aren’t taught this skill in school or at home and, as a result, rack up a lot of debt by the time they enter adulthood. If you want to learn how to manage your money wisely and avoid getting into debt, here are some simple rules to keep in mind:

1) Don’t spend more than what you have – It sounds so simple, but you’d be surprised at how many people don’t follow this logic. So I’ll repeat it again – don’t spend more than what you have. Or, more accurately, only spend what you can afford. For example, if you only have $100 in your bank account, don’t go out and buy the latest iPhone for $800. If you really want to get a brand new iPhone, then save up $800 for it. It may sound painful, and it may feel like it will take you an eternity to do so, but doing this will actually save you money in the long run!

2) Use cash – Why? Because when you use cash you can only spend what you have (see rule #1). So if you only have $100 in your bank account, you are only going to have $100. Using cash keeps you in check. It’s a good idea, too, to keep your receipts and write down what you spent your cash on so you know where the money went.

3) Avoid credit cards – Some people cannot handle credit cards. The act of swiping or tapping a card to pay for purchases means that some people use their credit card to pay for things they can’t afford (thereby breaking rule #1). This means that when the credit card statement arrives a few weeks later, they are only able to pay the minimum payment required and end up incurring interest charges; interest charges which are ridiculously high — 19.5% and higher! Paying interest on credit cards actually costs you more in the long run. You end up paying much more than the original cost of the item you bought. For these reasons, stay away from credit cards! If, however, you do insist on having a credit card, then at least make sure you can pay off your statement in full (i.e. don’t spend more than what you have)!

4) Put aside money into a savings account/emergency fund/rainy day fund – Life is unpredictable. You never know when you will need to have some extra money in your account for expenses you didn’t foresee. For example, let’s say your car badly needs a $200 repair job. Do you have some money saved up to pay for the repair and still pay the rent? What if you fall sick and can’t go to work for a few weeks – do you have some money in your bank account to tide you over until then? Put a little money aside from your paycheque each month into a savings account or other emergency fund. Do not use the money in this account unless you have to! The best part is that if you keep putting money into this account and don’t touch it for a while, your savings will actually grow thanks to interest! Your money can earn you money without you having to do anything. (In this same way, a credit card statement not paid in full can incur interest charges that will cost you more in the long run.)

Following these 4 simple rules will allow you to manage your money wisely and avoid getting into debt. Good luck!