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Hello, 2016! I am so pumped for the next twelve months, setting new goals and attacking new challenges. This year, I plan to grow my savings more than ever before, make more money from my side hustle and my full-time job, and tackle some long-standing goals that I’ve been putting off for awhile.
Let’s dive right into what I plan to accomplish this year:
Contribute $6,000 to my Retirement Fund
2016 will be my third year of setting retirement contribution goals. I started contributing $500 per month to my RRSP back in November of 2013 and have steadily added money to my investments ever since. This year, however, there will be a few changes to how I save for retirement:
In the past, I’ve set retirement contribution goals that target an overall balance. For example, last year my goal was to get my retirement savings up to $14,000. Setting my goal that way would’ve been fine, except the stock market has been horrible lately and I ended up contributing extra money to make it to $14,000. This year I’m changing to a contribution goal. I’ll add my $500 every month, and the balance can fluctuate without affecting my goal. I may still contribute extra, but it won’t be for the sake of a goal.
I’m also going to look into my husband’s RRSP match. I didn’t know he had one until I was reviewing his benefits package (wow that sounds like a dirty joke) because I recently switched off my health insurance and onto his. I want to look into it more before I share the details, but it looks like we could be getting some free money for retirement (woot!)
Accumulate $35,000 in My House Fund
Since I set such a piddly goal last year with this fund (I wanted to save $5,000), this year I’m going balls to the wall and setting an outrageous goal. Right now my retirement fund is sitting at $16,873, which means I’ll need to save $18,127 to achieve this objective. I never set a savings goal by picking a number out of thin air that sounds good. I always plug numbers into my savings spreadsheet and figure out what is feasible from there. $18,127 is a huge, huge stretch goal for me, but it is feasible, as long as everything goes according to plan.
Unlike last year, I won’t have any government rebates to boost my account balance, but I will have my income, my freelance income, my husband’s income, and hopefully two tax returns. Here’s how I’m guessing this is going to break down:
- Monthly Budgeted Contributions: $8,268
- Extra Paycheques $1,888
- Income Tax Returns: $2,400 (ish)
- Freelance Income: $5,571
And a pie chart!
69% of the money required to achieve this goal will come from planned contributions, and the rest will depend on my ability to hustle. I’ve never set a goal that relied so much on my side hustle before because I feel that any extra money coming in could dry up at any time. If that happens, I won’t be able to meet this goal.
That’s why this is a stretch goal. I’m not sure if I can reach it or not, but I’m going to give it my best effort.
Of course, there are several actions I can take to increase the amount of money going to my house fund, and decrease the amount that must come from my side hustle. I can continue to refine my budget and increase our monthly contributions. For example, I could lower my rent and other fixed expenses. I could also get a raise at work, or my husband could, and we could funnel this extra income into the house fund.
I could also look for a better place to keep my house fund, with a better interest rate. There is a new bank that just launched called EQ Bank. EQ Bank is an online-only bank that offers savings accounts. The interest rate on their EQ Bank Savings Plus account is very attractive at 3.00%. Right now my house fund is in a TFSA savings account earning just 0.8%.
If I moved both my emergency fund and my house fund into a TFSA making 3.00%, I’d only need to contribute $4,034 of my freelance income instead of $5,571. The best part? 3.00% isn’t a promotional rate for a set number of months; this is the regular interest rate.
Finally, they offer five free Interac e-transfers per month. Since I’m paid weekly (as is my husband), I usually transfer money into my house fund four times a month. It’s as if this account was made for my house fund…creepy.
It’s something I’m definitely going to look into.
Start Saving to Replace My Car
I’ve mentioned many times that I’d like to replace my car. It’s not because I want a new car or because I think I deserve an upgrade, I promise. It’s because my little eight-year-old city golf, while a great, inexpensive purchase four and a half years ago when I totaled my husband’s car, doesn’t meet our needs today in two key ways. First, it’s a manual (I flat out refuse to drive it downtown on Halifax hills), and second, it’s front wheel drive (which is inadequate for my husband’s 5:30 am winter highway commute).
While these are inconveniences, they aren’t deal breakers. It’s not like we have an infant and the car seat won’t fit in the back or anything, so we have some time before upgrading. Having time is a good thing because right now we have $0 saved for a new-to-us car. I imagine we’ll end up spending around $15,000 in a few years, and I’d ideally like to pay with cash. So this year I’m making it a priority to at least start saving for a new car.
I have no dollar amount for this goal; I just want to save something.
In addition to my monetary goals, I have several other goals I’d like to accomplish this year:
Obtain Life and Critical Illness Insurance
It’s time! I haven’t had to worry about life insurance or critical illness insurance because I’m still young and in my 20’s. But my husband is two years older than me, and he’s turning 29 this March. Before he hits the big 3-0, and I want to get a “real” life insurance policy (more than work offers).
Look Into My Husband’s RRSP Match
I mentioned above that my husband’s work offers an RRSP match. I don’t know the details, but I know I’m giving up free money by not taking advantage of it.
Finish My Professional Development Goals from 2015
I epically failed at my professional development goals last year, but we’re in a new year, and I have a new chance to knock them off my list.
Overall I plan to save about $25,127. That’s significantly more than last year (around $18,000) or the year before ($23,000). I don’t know if I can do it, but I’m going to give it my all.
Tell me about your financial goals for 2016! Are you planning on paying off a ton of debt? Getting starting with retirement savings? Boosting your emergency fund? I want to know!