You’ve earned your diploma, and now you’ve landed a job. Congratulations!  

With your new salary, you likely want to: 

  • pay off your student debt,  
  • save for retirement, and 
  • treat yourself.  

But, can you do it all? Yes! Andrew Thibeault, Sun Life Financial advisor, shares 3 tips that will help get you there: 

  1. Make a budget  
  2. Pay down your debt slowly  
  3. Save and pay down your loan at the same time 

1. Make a budget  

To get the most out of each paycheque, the first step is setting a realistic budget. “While this may not seem like a fun activity, it’s helpful,” says Thibeault. To make it easier, use this online tool for creating a budget that covers all the bases.  

A budget helps you figure out:  

  • What your cost of living is.  
  • How much money you can direct toward debt repayment. 
  • How much you can save.  
  • How much money is available for having fun.  

2. Pay down student debt slowly  

You have a 6-month grace period between the time you finish school and the time your payments start. Is it best to pay off your debt quickly, or save for your retirement?   

Andrew Thibeault’s suggests that you “start by paying off your credit cards. These have a much higher interest rate than a student loan or student line of credit.” 

“The advantage with student loans and lines of credit is that they have a low interest rate. You may be able to claim a non-refundable tax credit for the interest you pay on the loan in the year. Of course,” Thibeault continues, “you don’t want to hold on to debt forever. Eventually you have to think about paying it off in full. I recommend that you make saving your priority, while you continue with your minimum payments to lower your student debt.” 

Did you know? COVID-19 has changed the game for loan repayments. At least temporarily. As of April 1, 2021, you are not charged interest on Canada student loans. Quebec has taken similar measures as well. Check your provincial government website for more information.  

3. Save and pay off your student loan at the same time 

According to Andrew Thibeault, it’s possible to save, even while paying back a student loan. Here are 2 ways to do it. 

Save in your personal account

Andrew says to set up a system for saving at compound interest. It’s best to do this as soon as you start getting paid.  

“Often, the hardest part isn’t making money, it’s managing it,” he explains. “For young people starting out in a career, I suggest a system of automatic withdrawals. You set it up so that money transfers each time you deposit a pay. It moves automatically from a current account to a compound interest savings account.” Using this technique, you learn to live with the money you have, while you build your savings. 

Andrew strongly recommends getting a Tax-Free Savings Account (TFSA). A TFSA earns compound interest. In other words, you make interest on your interest.  Also, the growth in a TFSA is tax-free. This means that interest earned is not taxable like it is with other types of savings. 

Save at work  

“The idea behind a Registered Retirement Savings Plan (RRSP) is reducing the tax you have to pay. Contributing to an RRSP puts you in a lower tax bracket. It can also help guarantee you an income when you reach retirement,” explains Andrew. 

If you have an employer pension or group retirement savings plan, take advantage of the opportunity. “To maximize returns, I recommend investing the same percentage as your employer. You can invest the rest of the money you’re setting aside in another type of savings. The earlier you start contributing, the more it will pay off in the long term,” he adds.  

In summary: How to pay off your student loans 

  1. Make a budget to see much you can put toward paying your debt and how much you can save. 
  2. Pay off your student loan or line of credit gradually and prioritize saving in a compound interest product. 
  3. Take advantage of employer contributions to invest in an RRSP. 

Need help getting started paying off your student loan?  

The best way to get started is to develop a clear plan that aligns with your needs and priorities. A Sun Life Financial advisor can help.  

Most advisors now offer to meet Clients virtually by video chat. Find a Sun Life advisor today.  


This article is meant to only provide general information. Sun Life Assurance Company of Canada does not provide legal, accounting, taxation, or other professional advice. Please seek advice from a qualified professional, including a thorough examination of your specific legal, accounting and tax situation.