If you're struggling on a limited income, but you want to pay off your debt and save at least something for the future, what should you do? The secret could be in your wallet -- as long as you're smart about how you use it.

According to a recent survey by RBC Bank, 56 percent of Canadians aged 18-34 say that reducing or eliminating debt is a major priority. However, a much smaller number -- 26 percent --say that saving for retirement is just as important.

Experts agree that paying down debt is an essential goal for young people who are often burdened by higher interest rates and smaller incomes. However, as fewer Canadians in that same age group sign up for retirement accounts, some analysts worry that young Canadians could wind up in serious financial trouble if they put off saving for retirement for too long. "Retirement may seem far off in the future, and we understand that paying off debt, purchasing your first home or raising young families presents competing financial needs," says RBC Bank's Lee Ann Davies in a statement. However, "building a secure future can and should be part of any plan to meet those needs."      

Members of Generation X agree. According to analysts at TD Canada Trust, more Canadians in the 32-46 age group say that if they could do it all over again, they would have saved more in their 20s. "When you're younger, saving money may not seem like a top priority, but our research shows that, looking back, more than four-in-five Gen Xers wish they had been more financially responsible," said TD Trust's Carrie Russell in a statement.

First, keep expenses down
This may seem like obvious advice, but it is the most frequently ignored. If you can't afford to pay for a purchase at the end of the month, then don't buy it, say experts. Overspending on credit cards is one of the fastest ways college students and recent graduates get themselves into trouble. Using a card responsibly, however, can save money because you will be building a solid credit history that will pay dividends in the future. 

Sheldon Campbell, a University of Alberta graduate who is currently working toward his doctorate in the United States, agrees. Campbell remembers the days of easy credit when he used to see packages all over his college campus stuffed with credit card applications. "They were everywhere," says Campbell, "really easy to get." Campbell applied for a few cards himself before and after graduation, but he managed to avoid getting into excessive credit card debt by paying off his balance each month.

"I'm one of those people who can't stand interest payments," says Campbell. Instead, Campbell waits to buy purchases until he can afford them and avoids buying on impulse. "For me, it's about maximizing the resources I have now," he says.

Campbell recommends that young Canadians think about how much money can be saved by being patient with purchases and avoiding credit card interest payments. You can put that money toward a larger purchase later on, says Campbell. Or you can add it to your retirement account and watch your stash build over time.

Transfer your balance to a lower rate card
"Ask to be transferred to a low interest rate card, and pay off as much as possible and as fast as possible in order to be debt free," recommends Elena Jara of the nonprofit group, Credit Canada.  Transferring a high credit card balance to a lower rate card can be a smart way to save on interest payments. However, make sure that you put that card in a drawer and don't use it until you have paid off the balance in full.

Some cards also offer 0 percent or extremely low APRs for a fixed period of time -- which can be a handy tool for paying down your existing credit card balance without paying excessive interest. However, be sure to pay off the balance before the promotional period ends so that you don't wind up with a higher interest rate than you had before you applied for the card.        

Once you have successfully transferred your balance, calculate out how much you saved in interest each month and put that money toward savings.

Sign up for a rewards card -- but be careful how you use it
If you don't already have one, consider signing up for a rewards card that offers cash back with each purchase. Then, set up a system in which you track each dollar that you earned using the card. You may only earn a small amount of cash back. However, if you add that small amount of saved money to your retirement account, the compounding interest that you will earn over the long run could surprise you.

Be careful, however, about overspending on your card. The knowledge that you're earning money each time that you swipe can be both addictive and dangerous, say experts. A recent study from the Federal Reserve Bank of Chicago found that cash back rewards cards tend to encourage consumers to spend more than they would have with a regular credit card, leading cardholders to accumulate more debt than expected.

So if you don't think that you can discipline yourself to spend only on what you need, skip signing up for a card that could lead you to spend even more.

Educate yourself on what you can afford and how you can save
Elena Jara recommends that you first keep a file for receipts and track every item that you buy. "Be vigilant of all expenditures," wrote Jara in an e-mail, adding: "Identity theft is rampant and many consumers are unaware that another person could be using their credit/debit card." 

Jara also recommends that young people sign up with a financial adviser and learn as much as possible about what's out there. "Young adults really need to contact their banks and sit with a financial planner that can guide them with the right savings plan for them; such as RRSPs, TFSs or GICs." That way, young adults will have a better understanding of how these accounts "can help them achieve their financial goals." 

Finally, "always pay yourself," says Jara. Jara recommends that you put away at least 5 percent to 10 percent of your income, even if it seems impossible at the time. "I know many people say that they just can't afford it, but the reality is, once you start and it becomes a habit, it's easy to continue." 

See related: Canadians managing credit card debt better than expected