The importance of planning ahead: goal setting for your financial future

November is Financial Literacy Month. There’s no time like the present to reflect on your personal finance goals as you’re approaching the end of the year and looking ahead to the next. The short and long-term goals you put in place now will shape your financial future.

So, are you currently in the process of achieving your goals or do you need to develop some?

Our Client Service Advisors, who are all Certified Financial Planners (CFP®), often take our members through a short and simple goal setting exercise. In this article, we outline the exercise you can do on your own, with your partner or a family member. We’ve also highlighted a few ways to help you achieve your goals.

What are the benefits of goal setting?

• It identifies your goals and allows you to align with your partner/spouse’s goals
• It allows you to prioritize your goals by importance and establishes a timeline
• It helps determine if your goals are achievable
• It will help you clarify your next steps

The exercise

Take five minutes and write down a few short-term and long-term personal finance goals. The key to setting any goals is to make sure you’re specific and committed.

For example:

• For a short-term goal, I want to save $1,500 over the next six months for a vacation with my partner. I will do this by setting up a reoccurring bi-weekly transfer of $125 from my chequing account to my savings account, so I will have saved this amount by my deadline.
• For a long-term goal, I want to save $35,000 over the next five years to put it towards a down-payment on a condo. I will set up a reoccurring bi-weekly transfer of $269 from my chequing to my savings, TFSA and/or RRSP, so I will have saved this amount by my deadline.

Regularly review the amount you have decided to save to determine what costs and expenses you are willing to live without to achieve your goals.

Next, we’ll look at some additional ways you can achieve your personal finance goals – and it starts with financial literacy.

To help you achieve your goals

The first step to help you achieve your goals is to know what they will cost and ensuring your goals are integrated into your financial plan.

Start by reviewing your monthly and annual expenses. This will provide you with an awareness of where you are choosing to spend your money now. The purpose is to understand what your goals cost and to determine how they will impact your current expenses.

There are budgeting spreadsheet templates online that you can use as a starting point.

• Some examples of regular monthly expenses can include: groceries, gas, transportation, personal care, buying snacks and/or lunch at work, pet food, etc.
• Don’t forget to identify any possible variable monthly expenses such as: house repairs, car repairs, travel, kids’ activities and any equipment they’ll need, veterinarian bills, clothing, accounting fees.

Why is this important to do?

• Identifies your needs versus your wants
• Helps you account for pre-authorized payments for services you may no longer need/want
• Confirms whether you are operating with a monthly or annual deficit or surplus
• Empowers you to make different choices about where you spend your money

The second step is to increase your financial literacy by educating yourself in a few different ways:

• Read the personal finance sections of major newspapers, like The Globe and Mail and the Financial Post, which often have informative articles about personal financial planning.
• Speak with a financial advisor – If you don’t already have a financial advisor, research and meet with a few to determine the right fit for you.

Planning for your future is one of the most important things you can ever do. By identifying your goals early, you can put measures into place and adjust them along the way to help you achieve the lifestyle you want.

How we can help

One of the many advantages of being a member of the PSPP means you have access to our Client Service Advisors, who are all Certified Financial Planners®. Our Advisors provide personalized service and support on a broad range of topics from budgeting to retirement planning. They will take into account your personal and financial circumstances to help you make the most informed decision.

Our Advisory Services are available to you at no cost and are offered either in-person or over the phone. To book a one-on-one session, log in to your e-services account at the top-right corner of our website and select ‘Book My 1-on-1’. You can also find our Retirement Planner in your e-services account, which will help you to see if you’re on track for your retirement planning. All the resources you need, right at your fingertips!