Written by: Jasmine Taylor
Take the first step to reaching your financial goals! Are you saving to buy a home? A car? Saving for a well needed vacation after COVID? Or looking to renovate your home?
These are all dreams that can be achieved by turning them into goals.
Establish Your Goal
First you need to decide what exactly you are aiming to achieve. There are three different timelines for goals:
Short-term Goals: These usually take less than a year to save for. Examples include a vacation, purchasing a new stove or buying that expensive espresso machine that makes awesome lattes.
Mid-term Goals: These are goals that you cannot meet straight away. However, with a few years of commitment, you can accomplish them. These goals include buying a new vehicle, home renovations, saving for a down payment on a home, or paying off student debt.
Long-term Goals: These usually take longer than 5 years to accomplish. But that does not mean that they are not attainable! Do not give up. Since these take longer, they will also require more commitment to keep going. These include buying a home, saving for post secondary education, buying a boat or saving for retirement.
Create a Budget
You need to see where your money has been going and know exactly how much you spend on different things. Creating this spending plan allows you to determine in advance whether you will have enough money to do the things you need or the things that you want. This budget will allow you to prioritize your spending and direct your money to the things that are most important to you.
Allocate your Money
You need to decide how much that you are willing to put towards your goal each day, week, month or year.
It can be as little as $2 a day. That equals $730 a year! Or every pay cheque put aside 10% of that towards your goal. It all adds up.
If you are saving for the short term, you should put your money in something less risky than the stock market as you know that when you need it, it will be there. In the short term you can put your money in a high interest savings account to at least earn a little interest while it sits there.
If you have a longer time horizon for your goals, you should think about investing it in an Exchange traded Fund (ETF), a mutual fund or a bond. Each person has different needs and thus will put it into different things. Talk to your financial advisor to get specific advice on your current situation.
Stick to it!
This is the most important step. Just keep moving forward and you will get there! If you find yourself losing motivation try to do something that gives you that spark back.
Here are a list of things that you can try to keep motivated:
Remember your goals. If you lose sight of what you are saving for, you will most likely lose interest.
Do an annual review. Ask yourself questions like. What did I accomplish last year that I was proud of? What about last year that disappoints me the most? Where are my best opportunities for financial growth?
Set saving Milestones. If your goal is to save $50,000 for a down payment on your dream house then start with focusing on the first $5,000. If you break the goal into pieces it will be a lot less daunting.