Suze Orman warns Canadians: High-interest debt is bondage — here's her plan to protect your TFSA, RRSP and income

High-income earners aren’t immune, either. The same H&R Block Canada survey found that 81% of respondents — regardless of income level — feel their wages can’t keep up with rising costs.

For those caught in this cycle, each month can feel like a race to the next payday, leaving little room for emergencies, unexpected expenses or even the simple joys of life.

But personal finance expert Suze Orman says there’s a way out.

“The most important thing, really, for everybody to understand about their money … is that you have got to live a life below your means, but within your needs,” Orman said to CNBC (3).

Here are six simple-to-start steps Orman recommends to help you break free from counting down the days to the next payday.

Tip 1: Know your starting point

“It’s impossible to map out a route to your destination if you don’t know where you’re starting from.” — Suze Orman

Before you can make meaningful progress with your finances, it’s essential to understand exactly where you stand. Track your income, monthly expenses, debts and credit score — writing it down or using a budgeting app can make this process much easier.

For older adults with less time to build savings, it’s especially important to know your starting point. It will help you focus on high-impact actions, like paying down debt or boosting savings, and planning for long-term security.

A daily check-in of your accounts can show you exactly where your money is going.

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Once you have a handle on your finances and have begun building an emergency fund, consider consulting a financial professional. FP Canada’s Find a Planner tool at fpcanada.ca lets you search by location for a Certified Financial Planner (CFP) or a Qualified Associate Financial Planner (QAFP) near you. According to the FP Canada 2025 Financial Stress Index (4), Canadians who work with a financial professional are significantly more likely to feel hopeful about their financial futures than those who do not (57% vs. 47%).

Tip 2: Automate savings, even small amounts

“A portion of every paycheck should go directly into savings — automatically.” — Suze Orman

For those living paycheque to paycheque — especially older adults trying to catch up on retirement — every small contribution matters.

The key is consistency, not the size of the deposit. Even $25 to $50 from each paycheque can grow significantly over time when set up to transfer automatically and succumb to the magic of compounding.

Use a no-fee chequing account to set up automated payments to a no-fee high interest savings account.

This is also a good moment to think about where those automatic savings should go. Two of Canada’s most powerful tools for tax-efficient growth are:

• Registered Retirement Savings Plan (RRSP): Contributions are tax-deductible, reducing your taxable income in the year you contribute, and your investment grows tax-deferred until withdrawal. They’re particularly powerful for people in higher tax brackets.
• Tax-Free Savings Account (TFSA): Contributions are made with after-tax dollars, but all investment growth and withdrawals are completely tax-free. The annual contribution limit is $7,000 (as of 2026). The TFSA is especially useful as an emergency fund because you can withdraw funds at any time, without tax consequences, and the withdrawn room is restored on January 1 of the following calendar year.

For example, you can set up an EQ Bank account that includes an RRSP savings account and a TFSA savings account, where each account earns 1.5% on every dollar deposited. Collect savings automatically in these accounts before executing an investment strategy. Even automating a small contribution to either account every payday — before you have a chance to spend it — is one of the most effective savings habits you can build.

Tip 3: Protect yourself and your loved ones

Orman emphasizes that true financial stability isn’t only about budgeting and saving — it’s also about protecting what you’ve already built. That’s why life and disability insurance are part of her “Financial Strength Test.”

Despite its importance, PolicyMe’s 2025 Life Insurance Gap Report found that 42% of Canadians don’t have life insurance, or aren’t sure whether they do (5) — that’s more than 17 million Canadians missing a key layer of financial protection.

If you have dependents, life insurance can help cover essential expenses like housing, child care or education if something happens to you. Disability insurance is equally critical, since your ability to earn an income is often your biggest financial asset. Even if you’re single, having coverage can protect you from draining your savings or going into debt after an accident or illness.

The key is to start where you can. You don’t need the most expensive or comprehensive policy right away even modest coverage — often using a term life policy —within your budget can provide meaningful peace of mind. As you continue paying down debt and building savings, you can adjust your coverage over time.

You can get a PolicyMe term life insurance policy with coverage up to $5 million. Premiums start at just $21/month — making it easier for you to secure your family’s financial future within minutes. Just answer four questions, and PolicyMe will provide you with an instant, no-obligation quote which is valid for up to 90 days. Most policies are approved without any medical tests, and you can opt for term lengths ranging from 10 to 30 years.

Tip 4: Tackle high-interest debt fast

“Debt is bondage. You will never, ever, ever have financial freedom if you have debt.” — Suze Orman

The average Canadian carries $22,377 in non-mortgage debt, according to Equifax Canada Q2 2025 report (6). In total, Canadian households owe roughly $3.2 trillion, according to Statistics Canada, with a debt-to-income ratio of approximately 177.2% — among the highest in the G7 (7). In other words, for every dollar Canadians earn in after-tax income, they owe about $1.77.

High-interest balances are dangerous to your financial health. Credit cards and payday loans are especially damaging, silently draining your income and trapping you in a vicious cycle of debt. Payday loans are regulated at the provincial level in Canada but remain extremely costly — in Ontario, for example, lenders can charge up to $14 for every $100 borrowed (8), which works out to an annual percentage rate roughly between 365% and 391%.

Orman’s advice is simple but powerful: Focus on the balance with the highest interest rate first, attack it aggressively, and make minimum payments on the rest. Even small extra payments can quickly build momentum, reduce stress and free up cash so you can finally move beyond a life of living paycheque-to-paycheque.

If you’re a homeowner, the equity you’ve built in your home may offer a more efficient way to pay off high-interest debt. A home equity line of credit (HELOC) allows you to borrow against that equity as needed, often at a lower interest rate than credit cards, payday loans and car loans. In Canada, HELOCs are capped at 65% of your home’s appraised value on a standalone basis — or up to 80% when combined with a mortgage — under federal Office of the Superintendent of Financial Institutions (OSFI) guidelines. Rates are typically set at the bank’s prime rate plus a markup, for example prime plus 0.50% or 1.00%.

If you owe a substantial amount of debt and have no real estate assets to tap into, a non-profit credit counselling agency is your best starting point for guidance. Credit Canada and the Credit Counselling Society offer free counselling and can set up a Debt Management Program (DMP) that consolidates your payments with reduced or eliminated interest. For more serious debt situations, a Licensed Insolvency Trustee (LIT) can guide you through a Consumer Proposal — a legally binding federal process under the Bankruptcy and Insolvency Act that allows you to negotiate paying a portion of what you owe up to five years while protecting your assets.

Tip 5: Build a realistic emergency fund

“You need as much money in the bank that makes you feel secure.” — Suze Orman

It may surprise you that 56% of Canadians worry that just one unexpected expense — a car repair, a dental bill or a job loss — would push them into debt, according to the H&R Block Canada 2025 survey. Additionally, the FP Canada 2025 Financial Stress Index found that 42% of Canadians cite money as their greatest stressor, with 49% losing sleep over financial worries (9).

Orman advises that anyone serious about escaping the paycheque-to-paycheque cycle should find ways to scale back spending. Rather than looking for one big expense to cut, look to other monthly costs you can reduce by at least 10%, such as utilities.