Do you aspire to be financially successful? Goal setting is at the foundation of financial success. However, goal setting is easier said than done. The problem is we often feel overwhelmed when it comes to setting goals.
It’s no secret millennials are having a tough time landing their first job in the workforce. When they finally start receiving a steady paycheque, they often feel overwhelmed with the competition for their limited dollars. Millennials who move away from home the first time have to deal with a laundry list of expenses: rent, paying off student debt, car payments and RRSPs.
Millennials aren’t the only ones facing a slew of expenses and limited dollars. Young families often find themselves in the same situation. There’s rent or mortgage payments, property taxes, utilities, childcare expenses, assisting aging parents, RESPs, RRSPs, TFSAs and car payments.
This makes goal setting especially challenging. Should you pay down your mortgage or contribute to your RRSP, or both? If you have student debt, should you make that your top priority? Although there’s no easy answer, figuring out your own personal values and principles is a good first step.
It’s important to set financial goals that are unique to your personal situation and not just copy the goals of others. To do that, you need to get clear on what your financial priorities are. While your parents may have bought a home at age 25, that’s probably not realistic today when students are graduating later with more student debt.
There’s a stigma with renting that we need to overcome as a society. Although home ownership can be a very good way to grow your net worth, it has to be done strategically in order to ensure that you don’t bite more than you can chew. Home ownership can come with its own perils if not planned properly. I always preach taking baby steps which compounds over time. There’s nothing wrong with renting instead of buying for a period. In fact, renting can be more affordable than buying in many cities. The key is to save the extra money from renting and invest it, instead of using the cash surplus to go on an extra vacation.
To set goals, it’s helpful to have a brainstorming session with your family. With a pen and pad of paper, write down how you see your family in the future. Writing down your goals is crucial, it gives clarity. If you leave them floating up in your mind, you’re likely to feel overwhelmed and less likely to achieve your goals.
When setting goals, make sure they are SMART goals. SMART is an acronym that stands for goals that are Specific, Measurable, Attainable, Relevant, and Time-bound. For example, instead of saying you’d like to own a home, you can say, I’d like to save a down payment of $50,000 in three years. To make sure your goal is realistic, you can work backwards from there and figure out how much you need to save a week to reach that goal. You can do the same with other goals which could include paying off debt, saving towards retirement and building an emergency fund.
When setting goals it’s important to do your homework. If you’d like to buy a home for instance, look at the real estate listings in your desired neighbourhood and find out how much your dream home is selling for. You’ll also do well to find out other costs that come with home ownership such as closing cost, property taxes, maintenance fees, utilities etc.
Are you looking to purchase a home? Are you looking to save towards retirement? Planning for all these goals can be overwhelming and seating with a Financial Planner can help bring objectivity and clarity to your goals. Feel free to contact our office and let us help you set goals to get there.
