If your thirties are (or were) anything like mine, it can be a juggling act to try and balance all of your competing financial goals. We can’t afford to make the maximum contributions to each of our RRSPs, TFSAs, and the kids’ RESPs – let alone top-up our mortgage payments and still have money left over to, you know, live a little.
That means prioritizing our goals; deciding which ones get funded and which ones get left on the cutting room floor. It means striking the right balance between pleasing our present and future selves. It sometimes means spending instead of saving, or vice-versa.
Our competing financial goals
Financially savvy or not, we’re still a single-income household and need to make tough choices when it comes to our budget. We can’t max-out everything, so we pick the savings goals that are most important to us right now. For us that has meant making the maximum contribution to my RRSP and to the kids’ RESPs.
Sure, we could have funded one more savings goal, such as putting $5,000 onto the mortgage, or contributing that amount to one of our TFSAs. But that would have come at the expense of our summer vacation, which we look forward to and enjoy every year. Or at the expense of keeping an emergency fund, which, incidentally, came in handy when our hot-water tank died the night before we left on vacation. There’s a $350 service call I didn’t need, thankyouverymuch.
The good thing is that we continue chipping away at our goals. We don’t have to worry about my RRSP or the kids’ RESPs anymore because those contributions are automatic and have been for years. So what’s next?
We went through our list of big financial priorities and found that most have been taken care of. We already bought a new car and paid it off. Two years ago we developed the basement in our home and will have that loan paid off soon. We (okay, I) loosened up the purse strings and put more money towards our family vacation. Life is good.
Now we find ourselves with an extra $10,000 per year to start funding a new goal or two. Without any major expenses on the horizon it seems like a no-brainer to put the entire amount into our TFSAs. I say TFSA, and not extra mortgage payments, because with mortgage rates in the low 2 percent range I think it’s reasonable to assume we’ll get a better long-term rate of return investing in an ETF like VCN or VXC.
It’s nice to put some of our major expenses behind us and start knocking off another savings goal. We’ll keep going down this path until we do manage to max out all of our savings opportunities.
That might be years away, but with a good financial plan, open lines of communication between spouses, and the right balance between the present and future, I have no doubt we’ll achieve financial freedom soon.