Setting Financial Goals

Happy New Year!

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I also want to empower our 2SLGBTQ+ community to live their best financial life, so Finance with Adam is here to help you Be Your True, Authentic, Wealthy Self.

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 In line with the theme of goal setting and New Year's resolutions, lets talk about Setting Financial Goals.

Every Year (at least once), it could be helpful to take the following steps:

1. Review your current finances and evaluate any progress on existing goals.
2. Write out your new or revised financial goals.
3. Make an actionable plan to achieve them over time.

Think about what is most important to your financial life? What is stressing you out the most? Is it retirement planning, or is it paying down debt?

I've listed some of the most common financial goals people typically set, and If any of those resonate with you, you may want to consider adding them to your list and start making a plan! 

Saving for an Emergency Fund:

One of the most crucial financial goals is establishing an emergency fund. Life is unpredictable, and having a safety net to cover unexpected expenses can provide peace of mind and prevent falling into debt.

Adam's Insight: Its common to aim to set aside 3-6 months of your annual income. Determine what you can comfortably allow in your monthly budget to set aside and start there to build it slowly.

Paying off Debt:

Debt can be a significant burden on your financial well-being, along with your overall stress and health. Make it a priority to reduce or eliminate high-interest debt, such as credit card balances. Create a repayment plan and stick to it diligently.

Adam's Insight: Focus on repaying higher interest debt first like credit cards. Talk to your Bank or a Financial Professional as you may be eligible for a consolidation loan at a lower rate, or a lower rate credit card. This can allow you to become debt free faster, and free up cash flow!

Creating a Budget:

A well-planned budget is the foundation of financial success. Take the time to assess your income and expenses, categorize them, and set realistic spending targets. Budgeting helps you regain control of your money and ensures that you're living within your means.

Adam's Insight: It may be easier to budget your money in the same frequency you are paid and receive income (ex. Bi-weekly), so you don’t have to always budget for a month. This will make dividing funds up from each pay date easier to visualize. There are plenty of online templates or apps for budgets so you do not need to create your own.

Retirement Planning:

Investing in your future should be a top priority. Consider increasing your retirement contributions, whether through a registered plan (RRSP or TFSA) or through your employer programs. The power of compound interest can significantly impact your long-term wealth.

Adam's Insight: The earlier you start the better, so do not delay this and wait until you make more money. Budget even a small amount to be set aside and invest the money for long term. Check with your employer to see what matching programs they have in which you can take advantage of.

Saving for a Major Purchase:

If you have a specific purchase in mind, such as a vacation, down payment for a house or a car, set a goal to save for it. Establish a dedicated savings or investment account for that specific goal, and contribute regularly towards achieving that milestone.

Adam's Insight: You can have more than one investment account (multiple TFSA's etc.), so you may want to consider opening a specific account or investment for a particular goal you have. This way the investment risk can be matched with the time horizon and goal. Avoid using a credit card to make major purchases in which you cannot pay off quickly.

Building an Investment Portfolio:

Investing can be an excellent way to grow your wealth. Consider diversifying your financial portfolio by exploring different investment options, such as Mutual Funds, Stocks, bonds, or real estate. Educate yourself on investment strategies or seek guidance from a financial advisor.

Adam's Insight: It's best to get advice from a professional before you start your portfolio or rebalance your portfolio. Not all investments are right for everyone, so you will want to make sure the portfolio will have the potential to achieve your financial goals and meet your risk tolerance.

Improving Credit Score:

A good credit score opens doors to better financial opportunities. Make it a goal to improve your creditworthiness by paying bills on time, reducing debt, and reviewing your credit reports regularly. Take proactive steps to rectify any errors or discrepancies.

Adam's Insight: There are several free applications/websites in which you can use to check your credit score regularly. I use Borrowell and Credit Karma and check monthly with no cost or impact to my score. Monitoring your credit is important to also combat potential fraud and ensure accuracy.

What are your financial goals for this year? Let me know in a comment below!

Disclaimer: Opinions/advice expressed within Finance with Adam do not reflect TD Bank Group's position, strategies or opinions and are solely personal views of the author. Information within is for informational purposes only and is not intended to provide formal financial, legal, accounting or tax advice and should not be relied upon in that regard.