Financial Resolutions: Navigating Your Path to Success
ARTICLE IN PARTNERSHIP WITH TD.
As 2024 begins, Canadians are prioritizing financial goals, driven by concerns about inflation and the cost of living. According to the TD 2024 Financial Outlook survey, 60% of respondents have set financial resolutions, with new Canadians showing a high rate of 97%. Economic worries have prompted objectives such as savings, debt repayment, reduced spending, increased investments, and emergency fund creation. Notably, new Canadians aim to cut spending, with 40% targeting a $500 reduction monthly.
60% of Canadians respondents have set financial resolution for 2023.
90% of Canadians plan to cut back on spending.
30% of Canadians said they are looking to build up savings.
This collective effort reflects a shift towards sustainable spending amid economic uncertainties. Recognizing the link between financial well-being and mental health, setting year-round financial goals becomes crucial. A 2022 study conducted by market research firm Leger revealed that financial stress affects one in three Canadians, leading to anxiety, depression, and other mental health issues. While setting financial goals should be a year-round practice, the New Year provides an opportunity for reflection and the formulation of realistic, sustainable financial resolutions. Below is a guide to setting and keeping creating financial resolutions:
How To Set- and Keep Financial Resolutions
Step One: Establish Your Current Financial Situation
Evaluate your monthly spending and check if you're adhering to your budget using resources, such as the TD Financial Health Assessment tool. If you're new to budgeting, TD provides guidance on creating one in this helpful article.
After determining your monthly income and expenses, identify fixed costs like housing, property taxes, and insurance, which are challenging to change in the short term. Distinguish these from discretionary expenses like entertainment, dining out, and shopping, recognizing areas where adjustments can be made if needed.
Step Two: Follow SMART Criteria
After assessing your financial situation, establish a meaningful goal following the SMART criteria: specific, measurable, achievable, relevant, and time bound. Once you've identified a goal, create a deliberate plan outlining how you intend to achieve it.
For example, if you want to save $5000 in 12 months, you will only need to save $300 monthly. You can achieve this by simple lifestyle changes like packing a lunch instead of spending money daily. Similarly, if the goal is put an extra $100 monthly into savings, simple changes like $6 lattes to $3 coffees can contribute to achieving this goal.
Step Three: Track Current Plan & Make Necessary Changes
To gauge your progress and actively pursue your goals, place emphasis on the importance of measurable success. This involves regular budget reviews to ensure you're on track and quarterly assessments to determine the ongoing feasibility of your resolutions. If personal circumstances change, reassess, and potentially adjust your goals.
Conclusion
Embracing financial resolutions goes beyond a fleeting New Year's commitment – it's a pathway to nurturing a positive and robust financial relationship that deserves regular attention. By doing so, you're not just setting a goal; you're taking a significant step towards cultivating financial well-being. In a world where it often feels like control is elusive, establishing and pursuing financial goals can be a powerful way to regain a sense of direction and empowerment. Don't fret if you haven't set a financial goal for 2024 yet; it's never too late to embark on this empowering journey, irrespective of the goal's size or scope.
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ABOUT THE AUTHOR
Simon Trudel-Lachance
PIB — Finance and Operations Manager / Content Writer
Pride In Business article in partnership with TD.
By Simon Trudel-Lachance