As twenty-somethings, we have a lot on the go: we’re either still in school, looking for a job, or if we’re lucky enough to be employed, working our butts off to prove our worth. We’re also living on our own for the first time (or furiously saving up so we can do so), paying numerous bills, and in some cases, possibly gearing up to tie the knot or even start a family, all the while trying to enjoy our 20s. It’s a busy time, and the last thing most of us want to do is dedicate a Sunday afternoon to number crunching.
Insert the financial bucket list. Much like a traditional bucket list, it’s a list of money goals you want to conquer. An excellent tool to help you put your financial goals in perspective and keep you accountable, a financial bucket list is a great way for you to identify areas you need to work on.
Everyone’s goals will be different, and should realistically highlight what areas need improvement. For me, that means brushing up on my investing knowledge, and taking the time to re-evaluate my savings. Below are my goals for the next 12 months:
1) Deposit at least 20% of my paycheque into a TFSA or HISA each pay period. For the past one and half years, a huge portion of my income has gone toward travel. While I still try and save some money, due to the fact I haven’t had a steady income since August 2013, contributions to my savings have taken a back seat. It’s time to change that. There’s always money to be found; the key is evaluating my needs and wants and to start prioritizing.
2) Determine whether or not I can officially leave home and rent my own place within a year. This is a probably the most ambitious goal on my list. Although I haven’t lived at home permanently in a long time, when I finally resettle back into Ontario I would like to move into the city. It all comes down to my budget. While my commuting costs would decrease immensely, new costs such as utilities, groceries, and the (expensive) perks that come along with living in a city, would greatly increase my overall spending. The move may also require a lot of sacrifices, such as travel, which I’m not sure I’m ready to give up yet.
3) Brush up on my basic stock market knowledge. When I was young, I always associated the idea of investing in the stock market with adulthood. I’ve owned a mutual fund for two years, yet I still don’t fully understand how it works. As someone who’s interested in budgeting and investing, it’s high time I stop making excuses and dedicate the time to furthering my financial education. Plus, October is Investor Education Month (follow the hashtag #IEM2014 for tips from experts) – so there’s not better time to start learning than now!
4) As soon as I get full-time employment, start depositing a portion of my paycheque to my Registered Retirement Savings Plan (RRSP). I know it may seem early to start saving for retirement, but starting when you’re young has many advantages. The biggest one of all being the power of long-term compounding interest: the more time you give your investments to grow, the less you have to contribute. For example, if I started contributing $1,000 a year on my twentieth birthday for 14 years, I would have more money on my 65th birthday then Person B who follows the same investing pattern as me, but instead invests from age 30 to 64. Although I would’ve only invested $15,000, thanks to the power of compound interest, I would have $141,700 in the bank, and Person B would only have $118,100. (These calculations are based on this GetSmarterAboutMoney.ca case study.) Want to calculate your own RRSP savings? Try this user-friendly RRSP savings calculator.
5) Review my budget and spending habits at the end of each month and make changes as needed. Although I do this almost weekly while traveling, when I’m at home, the habit fizzles out fast. Keeping track of your spending and reviewing your budget is a great way to keep yourself accountable and it directly highlights problem areas. If I want to move out this year, keeping a close eye on my expenses is vital.
What are some of your goals on your financial bucket list? Tell us in the comments!