New Years Resolutions: Financial Goals for 2024
The start of a new year is the perfect time to set new resolutions and re-evaluate your financial goals. Whatever your short- and long-term financial goals are, the first thing you need to do is identify them and create a roadmap.
And that roadmap will look different for everyone. Perhaps you want to own a home, set money aside for your children’s education, remodel the kitchen, get out of debt, or save for a dream vacation.
Not sure what steps to take to make your near and long-term financial goals a reality? The following steps will help you get started.
Short-Term Financial Goals
Short term financial goals are money-related targets you want to get started on now or within the next 12 months.
Create a Budget
To reach your short-term financial goals in 2024 you need to create a budget. One popular strategy is the 50/30/20 rule. Up to 50% of your net earnings goes to things you need, like mortgage/rent and groceries; 30% goes to your wants, such as clothing, dinging out, entertainment; and 20% goes to savings or paying down debt.
Pay Down Debt
According to Statistics Canada, Canadians pay the highest portion of disposable income toward debt. The average Canadian household spends around 15 cents of every after-tax dollar to service their debt.
How can you get a handle on debt? With the avalanche approach, you make minimum payments on all debt and then put anything left over on the debt with the highest interest rate. Through the snowball method you pay off the smallest debt first.
Save for Discretionary Purchases
Once you’ve paid off your debt, start an emergency fund (which covers up to six months of expenses) and after that, save for discretionary purchases. An emergency fund can help you deal with any unexpected expenses, while a discretionary fund allows you to spend money on anything outside of your budget, such as a trip.
Long-Term Financial Goals
Long-term goals are financial objectives that are out at least five years. This can include planning for retirement or paying off a mortgage.
Make a Financial Plan
Just like short-term goals, you need to make a long-term financial plan. A long-term financial plan looks at how much money you have now, how much you’ll need, and what you need to do to get there. For those not confident with making a financial plan, a certified wealth management professional can sit down with you and look at your goals, keep track of your net worth, and help you determine how much you’ll need to save for the future.
Invest for Retirement
The majority of Canadians take on their financial planning alone and despite their best efforts, they are unprepared for retirement. Fifty-five percent of Canadians nearing retirement will need to change their lifestyle if they want to outlive their savings. That number is expected to jump to 73% when factoring in unexpected expenses. A registered financial planner can help you invest for your retirement, whether its through stocks, bonds, real estate, or other alternative investments.
Pay Off Your Mortgage
Interest rates were near record lows for decades, but to combat inflation, the Bank of Canada has raised its key lending rate, which impacts mortgages, numerous times since early 2022. In fact, the overnight lending rate of 5% leaves borrowing costs at a 22-year high. With rates at their highest level in decades, paying off a mortgage as quickly as possible can save tens of thousands of dollars in interest charges.
Sharp Asset Management – Helping You Reach Your Financial Goals
While everyone’s short-, medium-, and long-term financial goals are unique, we all have similar objectives: have a good income, save more money, grow investments, and plan for retirement. If you live in Toronto or the GTA and need help with your 2024 financial goals, contact the private wealth management professionals at Sharp Asset Management.
Sharp Asset Management is an independent wealth management firm that is 100% owner-operated and all of our investment counsellors are charter financial analysts. Our retirement planning professionals are not affiliated with any financial institution, securities firm or mutual fund company. This means our investment decisions are unbiased. To learn more about how Sharp Asset Management can help you with your retirement planning, contact us today.