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The Great-West Life Assurance Company, London Life Insurance Company and The Canada Life Assurance Company have become one company – The Canada Life Assurance Company. Discover the new Canada Life

The Great-West Life Assurance Company, London Life Insurance Company and The Canada Life Assurance Company have become one company – The Canada Life Assurance Company. Discover the new Canada Life

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Setting financial goals

Key takeaways

  • Different from a budget or a financial plan, financial goals are targets you set to help you achieve certain things with your money.
  • Financial goals can be achieved over the short-, medium- or long-term.
  • Setting these goals may help you feel less stressed about the bigger picture and can help you to create an action plan for success.

What are financial goals?

Financial goals are the targets you set yourself to achieve certain things with your money and form a crucial part of your overall financial plan.  

These goals are often tied to life events and personal objectives, such as living debt-free, creating a “safety net” of savings, buying a car or a home, paying for a wedding, starting a business, starting a family, travelling, or retiring.   

While there may be some crossover, financial goals will normally fall into 1 of 3 categories: 

Why set financial goals? 

Goals help you achieve life’s milestones and can help you build the life you want for yourself both now and in the future.  

These goals can be tailored towards specific objectives, helping you to feel focused, empowered, and accountable as you work towards them. 

There are many other reasons why it’s beneficial to set financial goals for yourself:  

  • Goals turn words or ideas into action
  • You can choose different products and strategies to help achieve these goals
  • The process of goal-setting helps to determine your priorities
  • You’re able to see and measure tangible progress, which can increase motivation and commitment
  • You can have a clear picture of your wider financial picture
  • Having clear goals may help reduce stress and anxiety 
  • Financial goals can help you feel more confident as you face the future 

How to set financial goals 

While some goals are easy to set, they’re not always as easy to meet. 

So how do you turn an ambition or aim into a tangible, achievable goal? 

First, it’s key that your goal is important to you. The more passionate you are about achieving it, the more likely you are to put a plan in place to do so. One way to do this is by ensuring your goal is a SMART goal. 

What’s a SMART goal? 

SMART stands for Specific, Measurable, Achievable, Relevant, and Time-sensitive. The aim of setting a SMART goal is to ensure that what you’re trying to achieve is aligned to each of these standards. 

How to set a SMART goal 

Let’s look at an example. 

Let’s say that after looking over your finances, you set a new goal: “I’d like to pay off my credit card debt.”

While it’s an admirable goal, we can see that this alone is quite vague; how much debt do you have? Is it across multiple cards, or just one? What’s the interest rate on your current balance? When do you want to have it paid off? By asking some more questions, you can see how this goal now becomes: 

  • Specific - I want to pay off $6,000 of credit card debt.
  • Measurable -  I’ll do this by making monthly payments, and I’ll have completed the goal when I reach a final balance of $0.
  • Achievable -  I’m able to do this by paying off $500 a month.
  • Relevant -  I want to be debt-free to allow me to save and invest towards other goals.
  • Time-bound -  I want to pay it off within the next 12 months.

We can see that what was once a general ambition has been refined into a SMART goal – but the job’s not done yet. To really work towards a SMART goal, you’ll need to somehow track your progress. 

You might want to consider a journal, an app, a goal chart, or a vision board that helps you clearly see your goals and measure your success in working towards them. 

How to achieve financial goals 

Both setting and achieving financial goals requires a basic understanding of personal finances, such as how to budget, how taxes work, the different types of investments available, and common products and accounts that can help you achieve your plans. 

You’ll also need to be organized and of course, ready to commit and work hard to achieve your goal. 

With all of that said, you don’t have to do it alone. There’s help available whether you’re just starting to set your goals or are working towards them, including: 

Tools 

Online tools and calculators can help you make sense of your money now as well as plan for the future. For example, if you’re a Canada Life workplace plan member, you can set or update your retirement income goal available through your online member account. 

Research 

As a starting point, you can learn more about the different types of products that could help you achieve your goals, whether that’s savings accounts, credit cards or personal loans. 

One way to generate income and achieve financial goals is through investing. You can choose to do this yourself, or to invest in managed solutions, which means your contributions are invested and handled for you by professional portfolio managers. You can even select products specifically designed for goals-based investing, meaning your advisor can help you align your investments directly with long or short-term goals. 

You can also make sure you’re making the most of registered accounts, which are accounts registered with the Government of Canada that provide tax benefits. Although they’re called savings accounts, many products like Tax-Free Savings Accounts (TFSA) and Registered Retirement Savings Plans (RRSP) are actually investment accounts. Your money is invested and managed by experts with the goal of growing your contributions over time. If you’re contributing to a workplace savings plan, you may already be growing your money through these types of investments. 

Advice 

Lastly, a great way to learn more about setting and achieving financial goals is to speak with an advisor or other financial expert. If you’re a member of a Canada Life workplace savings plan, we have licensed professionals who can help you with matters specific to your plan. Contact us to learn more.  

Taking into account your current financial situation, life goals and current tax laws and regulations, they’ll be able to suggest a strategy for achieving your financial goals, as well as provide information on relevant products and services.

What's next?

  • Everyone’s financial goals are specific to their individual circumstances, and so your goals should fit what’s right for you without worrying about anyone else’s goals or ambitions.
  • Putting a plan in place may help reduce stress and anxiety over your finances and help you to feel empowered as you work towards success.
  • If you need more help with setting some financial goals, speak to an advisor to ask questions and get the insight you need to get started and stay on track.
  • If you’re a Canada Life workplace plan member, we have licensed professionals that can help you with matters specific to your plan. Contact Canada Life to learn more.

The information provided is accurate to the best of our knowledge as of the date of publication. This information is general in nature, and is intended for educational purposes only.

Constellation Managed Portfolios is a trademark of The Canada Life Assurance Company.

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