Financial Goals Made Simple

2019-12-13   minute read

Linda Paul

Lifestyle Debt

When someone starts talking about financial goals what's the first thing that comes to your mind? Money for retirement? Investing? Taking a cruise around the world? Saving for university for your children? 

If you're struggling with your finances, these goals may seem completely out of reach. But those are not the only goals you can work towards. No matter how much or how little income you make, you can and will benefit from setting financial goals.

Person calculating their bills and money

Since financial goals are personal to everyone, they cover a massive spectrum for any budget or level of income. From simply creating a budget to saving for an annual holiday; from paying all your bills in full each month to being completely debt free; from rebuilding your credit to saving for your first home — financial goals need to be realistic and suitable to your life, for you to even get started.

Half the battle is choosing a goal that really means something to you, a goal that you see yourself achieving no matter what comes up.  

Any goal will only be reached if it's important enough to you personally. 

Your list might be long. It might be overwhelming.  You might need to break it down so that you don't give up even trying for any of them. What can help?

Time Bound Goals

Think of goals in terms of time — short, mid and long term.

Short term goals are usually easier to reach, and as the name suggests, can be completed quickly. 

Reaching short term goals boosts your confidence and creates a solid foundation for consistent progress towards your mid and long-term goals. 

Here is a list of suggested goals for each time bound category. Of course, your goals will depend on where you are in your life and what family responsibilities you have.  

Short-Term: Achievable within one year:

  • create a money management plan
  • lower household expenses
  • start an emergency fund
  • reduce debt
  • go on a vacation
  • save money for irregular expenses (annual bills, special occasions and gifts)

Mid-Term: Achievable between one and five years:

  • save a down payment for a home
  • eliminate consumer debt
  • give regularly to charity
  • regularly invest money
  • save for children's education
  • purchase a vehicle without financing

Long-Term: Achievable in ten or more years:

  • Reduce work hours
  • increase monthly investments
  • retire early
  • be mortgage free
  • buy a second home or a vacation home
  • travel or live abroad for a portion of the year

Why not take a few minutes right now to create your own list for each category? Don't hold back. Include your needs and wants, and way beyond. 

Next, decide which goals you want to create a plan for. Stumped on what to pick? Here are two strategies:

Strategy #1: Rate your goals.

Read over each goal again.  How does it feel to you? Is it what you personally want, or just something you think is expected?  Use a simple star system to visually see what is resonating with you. 

One star means its not that important and you're wondering why it even made it to the list in the first place. 

Five stars means you'd give up a regular expense in your budget to save money for it. 

Your five-star goals are the ones you will most likely stick to. 

Strategy #2:  Choose just one.

What if you're just not sure what to start saving for first? 

Think of this: If someone told you that you could choose one of your goals on your list, and they'd pay for half of it, which one would you pick?  That makes it a little easier doesn't it?  Now you can put five fat stars beside that goal and move on to creating a savings plan for it.

Don't be fooled by the simplicity of this exercise.  Writing down goals, then rating them according to their importance and what achieving them will mean for you and your life will firmly set them in your mind.  This is a crucial step to sticking to them and eventually achieving them. 

Start Saving

How do you start saving when it appears that there's no money in the budget?

Get clear on your spending habits.

Review your bank statement and credit cards statements to see what spending habits are repeated throughout the month.

For example — if you spend $5.00 a day on your wake-up coffee/treat, that's $1,825.00 a year.  Yes, that coffee run every day adds up fast.  Realistically, you're still going to want to buy coffees.  So even knocking your coffee habit down to every second day saves you $912.50 which can then be redirected into your highest priority savings plan. 

If your goal is important enough, you will take the time to figure out where you are potentially wasting money which otherwise could be helping you realize your financial goals. 

Reduce monthly bills

Many monthly expenses camouflage themselves as necessities when they are leaks in our money pool.    

Do you have subscriptions to apps on your phone that you forgot you were paying for?  Are you subscribed to multiple movie or music streaming providers?  Review what you are really utilizing and whether the extra cost per month is worth it.  Cancel superfluous subscriptions and direct that money into your savings goal.

Periodically review your cell phone and cable plans.  Even saving twenty dollars a month amounts to $240 a year.

Once you plug those money drains you will see a whole different pool of money growing.

Use Unexpected Money for Savings

A great boost to a savings goal is when you can filter in a large chunk of cash at once.  Think of the opportunities you may have to do this.  

Income tax refunds, year end bonuses at work, gifts of money from family, GST or other tax credits — all of these can be used in whole or in part to contribute to your savings goals.  A sizable injection to your savings goal will keep you motivated to keep on working towards them. 

Life Changing Debt Solutions

With the cost of living on the rise, making ends meet and paying debts off often leaves little or no room to save for the future.  Sometimes getting a fresh financial start is the only way to turn your savings goals into reality.

If you are facing this situation, MNP's qualified debt consultants can help find the best solution for you.

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