It's never a bad thing to have ambitious financial goals. Ideas of paying off thousands of dollars of credit card debt, or saving up six months' worth of expenses are good things.
However, it can be frustrating and overwhelming to look at such a big goal. You might feel as though you'll never get there. The key is to break down your financial goals so that they are more manageable. Here are 3 tips to help you do just that, whether you want to max out your TFSA contribution room or save more in your child's RESP:
1. Focus on smaller amounts to start
You might want to save up $10,000 in an emergency fund, but looking at that end number can be daunting. Instead of focusing on that end number, break it down into smaller amounts that you can more easily manage.
Your first step should be to try to set aside $25 a week. Look for ways to be comfortable doing that, and saving that amount, and then increase your weekly goal once you have made that modest savings part of your routine. As you increase your contributions, you'll feel a sense of accomplishment, and you'll be closer to your ultimate goal.
This method works whether you are trying to increase the amount you put in your RRSP, pay down debt, or accomplish any of your other financial goals.
2. Be realistic about the time frame
Yes, we've heard stories about people who have paid off $50,000 of student loan debt in one year. However, what worked for them might not be practical for you. Rather than expecting to be able to pay all that off in one year, consider that it might make more sense for you to take three years or five years. Figure out a doable plan, then figure out how much you need to aim for each month, or even each week, to make it happen.
This is a better way to track your progress, as well as stay motivated. When you have it planned out, you are more likely to feel good about being on time, and you know you can handle the timeline, so you will also be less likely to give up when you see that your goal is unattainable in a specific time frame.
3. Make lifestyle changes to save money
In order to free up some of the money you want to save, it makes sense to engage in lifestyle changes that can make a difference. The things you do can save you money on insurance premiums, keep you from wasting money on things that don't matter to you, and help you change the way you see the world.
Start out by making small lifestyle changes. Log these changes and keep track of how much money you save. Changing the way you consume entertainment (ditch the cable and convert to streaming) and re-evaluating your grocery needs (stop buying expensive food items and focus on less-expensive staples and sales), are just two lifestyle changes that can make a difference.
Convert those lifestyle changes into money you can put toward your financial goals, and you'll be happier, healthier, and wealthier.
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