10 financial goals to consider
Here are 10 financial goals to consider in January (or any time of year):
Learn the importance of budgeting
It’s hard to reach any financial goal without understanding the importance of budgeting. A budget keeps you focused on your goals and helps you avoid overspending on things that don’t contribute to your overall financial plan. Not sure how to get started? We shared 5 simple steps that will help you establish a budget. Or, check out our favourite budgeting apps that can help you keep track of spending from your mobile device.
Try to reduce your spending by 10%
By creating a budget, you can find opportunities to reduce your spending. Try to reduce your spending in one or two categories; maybe you can lower your grocery bill by price matching and using coupons, or perhaps you can try to negotiate a better price for your phone and internet package. Reducing your spending by even as little as 10% gives you more flexibility to contribute to your short- and long-term savings goals.
Get out of debt (and stay out of debt)
Maybe paying off debt has been your goal for a few years now, but if you’re still not making progress then make it a priority this year. Most people manage to pay off debt initially, but find themselves in the same situation a few months later. If you’re struggling to pay down debt, you may want to consider a consolidation loan to help simplify your payment schedule.
Once debt is paid off, it’s important to develop healthy spending habits, especially when it comes to using credit cards. We put together some tips on using credit cards responsibly, to help you avoid getting behind on payments and going into debt.
Start or grow your emergency fund
Here’s why an emergency fund is so important: in 2016, an Ipsos survey revealed that half of Canadians are only $200 away from not being able to pay bills. And with recent financial challenges like mounting Canadian household debt, this issue isn’t likely to go anywhere. $200 doesn’t leave a lot of room to cover unexpected expenses, so if your finances are feeing tight it may be time for a change. An emergency fund gives the stability and flexibility to tackle repairs and other emergency expenses as they arise, without having to rely on credit cards or loans to pay for them.
Create a retirement plan
If you’re young, planning for retirement may not seem like a priority. But, it’s the best way to take advantage of investment earnings. Putting away an amount even as small as $20 a month will help you develop good saving habits. Then, gradually increase that number as you can afford to save more.
If you’re older, you may already be planning for retirement. But, maybe it’s time to re-evaluate your goals. Is your money in the right investment funds? Can you find a bit more room in your budget to increase your savings? Regular check-ins will ensure you’re on track for retirement.
Tip: Don’t forget to make your RRSP contributions by March 1.
Save for your child’s education
Open an RESP account for your child. Already started one? Read our tips for maximizing RESP savings.
Save for a down payment
Is a new house in your financial plan for the next year? Whether it’s your first house or not, it’s important to save for a down payment. A larger down payment can help you reduce mortgage payments, help you secure your financing, and could help you avoid paying mortgage default insurance. Plus if you’ve set your sights high, the larger your down payment the more expensive of a house you may be able to afford.
Pay down your mortgage
Happy with where you live? Great! Instead of saving for a down payment, consider saving to pay down your mortgage. A lot of mortgages allow you to make lump sum payments at the end of your term (without penalty). Take advantage of these opportunities to save money on interest, and pay off your mortgage faster.
Save for a big event
Is there a wedding in your future? Or, maybe you’re planning on taking a family vacation. Determine how much money you’ll need to save for the event and break it up into smaller milestones. Plan to save a certain amount by spring, another amount by summer, and keep going until you reach your savings goal.
Stay on top of your credit – monitor your credit score and report
Staying on top of your credit score is an important part of being financially-savvy. Knowing and understanding how your credit report works can help you improve your credit score overtime. Having a healthy credit score ensures you can access loans and other credit products when you need to.
Not sure which financial goal to work towards this year? You don’t have to pick just one. Every financial goal you work towards will help you achieve better financial well-being. For example, if you reduce your spending, you’ll have more money to put towards debt repayment. Once you pay off debt, you’ll have more money to put towards saving for retirement and your child’s education. Whichever financial goal (or goals) you pick will help you create a better financial future for yourself and your family.