How to achieve those 6 Common Financial Goals

by Mary Ann Marriott
November 22, 2019
Every week I meet with individuals to provide Financial Counselling as part of their insolvency process. I’ve noticed that when we get to the “Goal Setting” section there are really only a handful of goals that most are striving for. The top two cover the basic of Money Management:
  • Make ends meet (a balanced budget)
  • Save for emergencies
Two are related to large purchases:
  • Buy a home
  • Replace a vehicle
And the remaining - look ahead to the future:
  • Have a retirement fund
  • Save for children’s education
  The following are some considerations when considering these 6 goals:
  1. Make ends meet (a balanced budget)
    1. This is the starting point. Every other goals depends on this
    2. The question you need to answer is “Do I have enough? More than enough? Or, not enough?” Everything you do next will be based on the answers to these questions.
    3. There are many different ways to set up a budget or a spending plan. Try different budgeting methods to find what is best for you.
    4. Don’t give up. This is typically a work in progress and it may take some time to get a workable plan in place.
    5. Don’t be afraid to ask for help. There are professionals that can assist you, resources online or perhaps you can ask a friend or business associate who is good with money management to give you some pointers.
  1. Save for Emergencies
    1. Setting aside money for things that WILL come up or things that MAY come up is essential to a workable plan. Saving for a vacation, for example, will not work if there is no plan for things like vehicle repairs, interruptions in employment, etc.
    2. Start small. Even if it is only $25 per month…take that amount and put it aside before anything else. If you can’t live without it, the money is right there, you can take it back. If you find you can live without it comfortably, increase it. Find the optimal level for you that still allows you to live comfortably.
    3. If you cannot set aside any amount of money, work on increasing income or decreasing expenses to get you to that point.
    4. Sell stuff – sell things you can make, buy and sell items, purge old items you no longer need. Use those funds to start your emergency fund.
  1. Buy a home
    1. Making a large purchase, such as a home, should involve some pre-thought and planning.
    2. Create a “future” spending plan by changing your expense to match what you will have with the home purchase (ie. remove rent and add the mortgage and property taxes, change tenants insurance to home insurance, allow an amount for home maintenance (based on some research I completed, you should be putting at least $200 per month away to cover home maintenance on a new home, more for older homes).
    3. Pay attention to your credit score. Applying for a mortgage and finding out your credit score is low will only delay the process, sometimes by years.
    4. Talk to your bank or a mortgage broker in advance to see if you qualify for a mortgage and get a sense of the mortgage payment amount
    5. Talk to a Real Estate agent to discuss other expenses that you may have overlooked
  1. Retirement Fund
    1. As with the emergency fund, something is better than nothing. Start with a small amount and increase it as you are able to.
    2. If your company has a company-match program, take advantage of it as soon as you can. Your employer will match a portion of your contribution. In essence, you are getting free money towards your retirement.
    3. If you contribute to an RRSP and get a tax refund as a result consider re-investing that refund into your retirement fund.
    4. Start early if possible, but know that it is never too later to start something J
  1. Save for Children’s Education
    1. RESP’s (Registered Education Savings Plans) are another good way to get some free money. The government gives you grant money just for having the account.
    2. As with the other savings tips, start with anything. Even $25 a month can add up. I should know, that’s where I started many years ago for my kids J
    3. Understand that even though you are saving this for your child/children, the money is essentially yours. You have access to the funds at any time. As a result, the funds are not creditor protected and you risk losing them in the event of a bankruptcy.
    4. If your child/children do not pursue secondary education, you won’t lose your contributions, only the grant money.
    5. Funds can be used for tuition, accommodations, books or simply living expenses to supplement other school funding.
These are just some of the tips that I could come up with. I am sure there are many, many more that can be added. If you have an addition, please put it in the comment below J My goal with this collection of tips is to get you thinking about the goals you have and how you might start working towards them. It would be great if you can start working on everything all at once, but also perfectly ok if you cannot. One step at a time. One day at a time. Meet yourself where you are. Start the journey and course-correct as required.