Skilled Trade Worker: Managing Debt and Building Wealth 

^{By Bromwich+Smith Staff | 951 words | Reading Time: 4 minutes and 45 seconds | Date: 2023/05/23}

The need for skilled trades workers continues to grow with 1 in 6 Canadians currently working in the trades but its not enough. The demand is growing and provinces are exploring new ways to find experienced workers to fill the roles needed. The cost of learning a trade is estimated at $2-$16,000 compared to the average $26,075 of debt a University student graduates with. The average unionized trade worker will start out making more than the average new graduate, which makes it easy to see why this line of work can be enticing to many.  

With young new workers making good starting income and little debt it may be a surprise to know that these workers find themselves in tough financial spots. Picture yourself as a young 21 year old, making a strong salary with plenty of opportunities for overtime. You have a small student loan but it doesn’t need to be paid back yet so you have not started making payments. You purchase a house at an interest rate you can afford now, but then start using your credit cards for nights out with friends, buy a large work truck for work and the need to purchase tools of your trade. You start to burn out from all the extra hours, your overtime gets cut back, or maybe you get injured on the job. The paycheques dry up, but the expenses are still there. How do you manage the debt that has been accumulated over time? 

1. Create a Budget and Maintain it. One of the most simple ways to manage debt and build wealth is to  know what debt you have, and what income you have.  As a skilled trade worker, your income may be based on overtime, number of hours or projects or may be seasonal so its not always consistent. That is one reason why its even more important to create a budget that is realistic and allows you to manage your expenses effectively. Start by listing all your monthly income and expenses, including housing, utilities, food, transportation, and any other bills or debts. Some of these expenses are set in price and due date, but others vary each month and that’s ok. Knowing when bills are coming due, and an estimated price if it is not the same each billing cycle. Once you have a clear picture of your income and expenses, you can identify areas where you can cut back on expenses and make adjustments to your spending habits to save money. 

2. Reduce Debt. High-interest debt, such as credit card debt and personal loans, can be a substantial financial worry, especially if you're struggling to make payments. To manage this debt, there are several methods to try. Some work better for others, and it is ok to try one and determine it is not right for you and to try another method. One way to reduce debt is to start with the lowest debt, one put all your efforts into paying it down while maintaining minimal payments on all other debts. Once this debt is paid, take the amount you had been paying and add it to the next debt owed. Another option is to start by paying off high-interest as this will save you money on interest charges over time. You can also consider consolidating your debt with a debt consolidation loan. However, be sure to read the terms and conditions carefully and avoid taking on more debt than you can manage. 
    

3. Build your savings. As a skilled trade worker, unexpected expenses such as equipment repairs, medical bills, or job loss can quickly derail your financial goals. To avoid being caught in a surprise situation, it's essential to save for emergencies. Aim to save at least three to six months of living expenses in an emergency fund. This will help to keep you afloat in an emergency.  
    

4. Invest in You. We know that Retirement may seem far away, but it's essential to start planning for it early. As a skilled trade worker, you may not have access to a traditional pension plan, so it's crucial to invest in your retirement. Contribute as much as you can to your retirement savings each year, and take advantage of any employer matching contributions. Keep up with your education, as there are new ways of learning and new programs all the time. By keeping up with the tends, and ensuring you have the skills to perform you will increase your knowledge, and add to your value as a worker.  
    

5. Diversify Your Income. Depending on your specific skill, you may have periods of inactivity between jobs, which can have a negative impact your income. Diversifying your income streams can help you increase your earning potential. Consider taking on side gigs or freelance work in your area of expertise or look for opportunities to teach or mentor others in your field. Online groups are a great resource, that will not require memberships or charge fees to join. Consider looking at posting boards around the school you attended and speaking to current instructors. They may know of opportunities available.  

We know that, managing debt and building wealth as a skilled trade worker is important to ensure that you can build your income even during slow work periods. By creating a budget, reducing high-interest debt, saving for emergencies, investing in your retirement, and diversifying your income streams, you can succeed in achieving financial stability. 

If you find yourself struggling with debt Bromwich+Smith has a number of debt relief strategies to help you regain control of your finances and get your life back on track. Reach out today for a free, confidential, no obligation consultation. Bromwich+Smith’s Debt Relief Specialists are available by phone at 1.855.884.9243, or request a call back at contact us page.