The deadline is approaching next month for the United States to come up with an agreement to raise the $16.4-trillion debt ceiling. The outcome has wide ranging consequences with the potential to have a significant impact on the global economy and stock markets.

While putting their financial houses in order is a top priority for governments, Bank of Montreal (BMO) suggests it should also be top of mind for consumers and their financial affairs.

The BMO Household Debt Report shows that 25% of Canadians surveyed are debt-free, however 41% say that they have taken on more debt in the past five years as a result of increased spending.

“While debt is a part of life for the majority of Canadians, it doesn’t have to be a permanent fixture,” said Nancy Marescotti, director, BMO Bank of Montreal. “Establishing a household budget that includes a debt repayment plan and accounts for other priorities and financial goals such as savings is essential.”

You can share these five tips from BMO to help your clients avoid hitting their personal debt ceilings:

> Don’t overspend
Develop a budget that establishes how household expenses will be paid and how spending will be managed. Take advantage of free online tools to help stay on top of everyday household spending and saving.

> Manage credit card debt
Pay down credit cards, beginning with those that carry the highest interest rate, and consider using a low rate card for purchases.

> Invest to save
Set up a Tax Free Savings Account (TFSA) or high interest savings account to set aside extra cash in case of an emergency. Also consider using Exchange Traded Funds to reduce management expense fees.

> Become mortgage free faster
Cutting the amortization and increasing monthly payments on mortgages can help homeowners pay down their mortgages faster while saving thousands of dollars in interest costs. Increasing the frequency of payments and/or making lump sum payments will also help to pay down mortgages faster.

> Have a Plan B
Help clients develop a fall back plan in case they are unable to meet their financial obligations as a result of unexpected circumstances, such as loss of work, or damage to personal property, such as a home or vehicle.