I’ve been blogging for nearly 15 years and one reason I keep things going here (admittedly more infrequently than I’d like) is that I thoroughly enjoy looking back at old articles, especially when it comes to financial goals. In fact, one of my favourite posts of all time is a 2019 net worth update when I optimistically quipped, “2020 is going to be a great year!”.
Too funny.
Setting financial goals can be tricky because you need to make some assumptions about the future – that you’ll earn what you think you’re going to earn, spend what you think you’re going to spend, and save what you think you’re going to save without too many surprises along the way.
But a year is a long time and life can be surprising. Heck, just look at the last five years and what has changed around the world and in your own lives.
At the end of 2019, I had just quit my day job and decided to go all-in on my financial planning business and freelance writing. Then a global pandemic hit, markets crashed, and I was questioning everything.
But it turned out the shift to Zoom and more work-from-home freedom was a tremendous boon for our business. With travel plans on hold for two years, we saved a bunch of money and reconsidered our living situation. We built a new house that fit our new lifestyle (office, home gym, closer to the kids’ new schools).
Annual goal setting is just a microcosm of financial planning. You have a general idea of what you want out of life, and chart a course to get there. Short-term planning is a little more certain than planning many decades in advance. But it still requires regular monitoring, not only to see if you’re on the right track but if those goals are still your top priorities. Again, life can be surprising.
Last year I listed our financial goals for 2024:
- Give ourselves another pay raise for 2024. We plan on increasing our wages by 10%.
- Reorganize kids’ RESPs to follow the Justin Bender RESP strategy. That means selling e-Series funds and setting up a risk appropriate ETF portfolio for each child. We’re also switching to annual contributions (January) and making one catch-up contribution for our oldest child. Total contributions of $7,500 in 2024.
- Revenge travel part two. We plan on taking a hot holiday in February, an epic trip through Europe in July (including a Taylor Swift concert in Zurich!), and a return to Scotland later in the year.
- Invest excess profits in the corporate investing account (targeting $90,000).
- Renew mortgage, taking the best of either a short-term fixed rate (1-2 years) or 5-year variable rate when it comes up for renewal in May.
Checking in a year later, how did we do?
Well, we recognized a glaring hole in our plan. Our TFSAs. So, we actually increased our income significantly more than expected this year (40%) to help facilitate our TFSA snowball (refilling our TFSAs as quickly as possible). My wife and I will have each contributed $28,000 to our empty TFSAs this year.
We did reorganize our kids’ family RESP account, selling off the long-held TD e-Series funds and buying VEQT and VSB for our oldest daughter and XEQT and XSB for our youngest daughter. We did the catch-up contribution of $2,500 for our oldest daughter and contributed a total of $7,500 in January. I’m really pleased with this transition, as it’s dead-simple to manage and separate each child’s share of the account.
We thoroughly enjoyed our trips this year, soaking up the sun in Cancun, traversing across four countries this summer, and enjoying a relaxing stay in Edinburgh this fall.
Our business hit record revenue this year, which allowed us to meet our higher personal income needs and come reasonably close to reaching our corporate investing target. We’ll contribute $70,000 to our corporate investments. Again, we changed this up on the fly to prioritize a faster TFSA catch-up. Paying a bit more personal tax now is worth getting money into our TFSAs to grow tax-free for longer.
Finally, we did renew our mortgage in April but ended up going with a 3-year fixed rate term at 4.94%. That term was projecting to save the most money at the time, since we had yet to see an interest rate cut from either the Bank of Canada or the U.S. Federal Reserve. Had our renewal come up later in the summer we might have opted for a variable rate. Oh well.
What’s in-store for 2025? Here are our top financial goals for the year ahead:
- Contribute $28,000 each to our TFSAs as part of our TFSA snowball (aggressive catch-up) strategy.
- Contribute $5,000 to our kids’ RESP in January and rebalance the portfolio for their age 16 and 13 years.
- Take three trips (Cancun in February, Italy in April, and England/Scotland/possibly Finland in the summer).
- Earn enough business revenue to meet our personal income needs (same as 2024) and contribute $80,000 to our corporate investments.
- Pay for bi-weekly cleaning, summer lawn care, and winter snow removal to allow more time for work, leisure, and family.
- Reach the $2M net worth milestone (a stretch goal that is only possible with another strong year of market returns).
We’re painfully aware that our kids are fast approaching their post-secondary years and life could look dramatically different in the near future. We’re thinking carefully about the trips we want to take with them while they’re still under our roof, and about where they might want to attend school when the time comes.
We’re building up our financial resiliency by maxing out our TFSAs again, maxing out the kids’ RESPs, and likely holding more cash than usual in our business just in case. In case of what? In case post-secondary is more expensive than anticipated. In case we have a chance to take a bucket list trip together. In case we want to move again (not anytime soon, I hope!) and follow our kids wherever life takes them.
Financial planning is about setting up future-you with options. Goals and priorities might change. We always want to be in a strong financial position so we can adapt, if needed.
How did you do with your financial goals in 2024? Have you thought about your 2025 goals yet? Let me know in the comments.
