Weekend Reading: 2020 Financial Goals Edition

Happy New Year and welcome back to the blog! With an unforgettable 2019 now in the rearview mirror we look ahead to 2020 and what’s to come. Goal setting is such a powerful motivator for me. This year, as I move to full-time blogger, freelancer, and fee-only advisor, it’s even more critical to map out my 2020 financial goals and make this transition a success.

Goal #1: Maintain Current Spending and Savings Rate

The promise I made to myself and my family is that this transition will have no negative financial impact to our lifestyle. That means maintaining our current spending on things like groceries, entertainment, kids’ activities, and travel. I also refuse to reduce or pause our current savings contributions, so we must maintain our savings rate.

Thankfully, I’ve diligently tracked my spending for the past decade and so I know how much we need to earn to hit our spending and savings goals. I’ve also tracked our business income for the past 10 years and have a good idea of what to forecast for 2020 income.

When I created our 2020 budget I used last year’s spending as a baseline and made sure to include our savings targets in the forecast.

While my estimates are conservative I do have a back-up plan in case our income does not meet these projections. We have a $35,000 emergency fund that can be tapped during slow earnings months. I don’t want to work any harder than I have to but I also have the option to increase my work output – like taking on more writing assignments from existing or new freelance clients.

This goal is highly linked to the remaining goals below:

Goal #2: Max Out RRSPs

I’ve maxed out all of my available RRSP room, but will have another $3,600 or so to contribute in 2020 (reduced thanks to the pension adjustment). I’ve set up automatic contributions of $300 per month to max out my RRSP for 2020. I invest 100 percent of my RRSP funds in Vanguard’s VEQT.

My wife has about $9,000 in available contribution room and she’ll likely max that out before the March 2nd RRSP deadline. My wife’s RRSP is invested in a Wealthsimple robo-advisor account.

Goal #3: Top-Up TFSA

Many of you know the story. I maxed out my TFSA from 2009-2011, then withdrew all the funds to top-up the downpayment on our new house. Then we bought a new car and paid it off over three years, which meant I did not have the funds available to contribute to my TFSA.

Now I’m in catch-up mode and have been contributing $1,000 per month ($12,000 per year) to my TFSA for the past two-and-a-half years. I aim to continue that plan throughout 2020 and beyond until I’m fully caught-up.

I invest 100 percent of my TFSA funds in Vanguard’s VEQT.

Goal #4: Max out RESPs

We’ll continue to max-out our kids’ RESP account – contributing $2,500 per child, per year to take advantage of the $500 per child education savings grant (CESG).

The kids’ RESP account is invested in TD e-Series funds (Canadian equity, U.S. equity, and International equity funds). My kids will turn 11 and 8 this year and so I plan to introduce a bond fund soon to start lowering the volatility of this portfolio.

Goal #5: Travel More

No longer limited by 22 vacation days I plan to increase our travel time to include three international trips and one Canadian trip in 2020. Two of those trips are already booked, with a week in Maui this February and three weeks in Italy in April. 

We’re also eying a potential return to Scotland this summer, plus a trip to the west coast in the late summer / early fall. 

Our flights to Maui and Italy, plus half of our accommodations were paid for last year (mostly with credit card rewards points). The remaining costs are included in our 2020 budget.

Goal #6: Work Less

I’ve had a side-hustle for as long as I can remember. When I started my career in hospitality, I joined every board and community organization I could get into to raise my profile and build my resume. That meant sacrificing a lot of personal time to volunteer and network.

Then I switched careers and had kids. I dropped most of the volunteering to spend more time at home with my family. But that’s also when I started this blog, and spending some of my evenings and weekends writing and eventually doing one-on-one financial planning.

I started burning out last year. So I made the bold decision to quit my job and focus on my online business full-time. I don’t want to fall into the same trap of overworking myself, but at the same time I want the business and our finances to flourish.

My goal is to spend no more than 25-30 hours per week working on my business. This includes writing articles here, for the Toronto Star, and at Young & Thrifty, plus working with clients in my fee-only financial planning practice, and promoting the brand.

A tentative schedule has me working Monday to Thursday from 8:30 a.m. to 11:30 a.m., taking an hour break for lunch, and working from 12:30 p.m. to 3:30 p.m. On Friday I’d work from 8:30 a.m. to 11:30 a.m. The goal is to be finished work when my kids get home from school.

My wife plays a major role in helping manage the work flow, as she handles all of the client emails, bookkeeping, and administration. That frees me up to do what I do best, which is write and plan.

Goal #7: No New Debt

This has been a goal for several years and one of the reasons why we can maintain such a high savings rate. We have no debt besides our mortgage. We’ve been car payment free for several years, and our cars are in great shape – there’s simply no need to upgrade them for the foreseeable future. 

We’re happy in our current home with no immediate plans for renovations. There’s simply no need to take on any new debt. 

This Week’s Recap:

On Tuesday I recapped the year with my 2019 net worth update. A 21 percent gain year-over-year has us on track to hit the $1M mark by the end of this year.

January typically brings an uptick in search traffic to the blog and this year is no different. Here’s what new visitors have been landing on:

Over on Young & Thrifty I offered eight financial resolutions for the New Year.

Promo of the Week:

Also popular this week is my article explaining how to transfer your RRSP to Wealthsimple. It seems many of you are looking to reduce your investing fees and finally make the switch to low-cost investing through a robo-advisor.

Wealthsimple is Canada’s leading robo-advisor and Boomer & Echo readers get their first $10,000 managed free for one year when they open up a new Wealthsimple account.

Weekend Reading:

Our friends at Credit Card Genius looked at the best credit cards in Canada across 24 different categories to compile their list of best credit cards in Canada.

Travel expert Barry Choi answers some frequently asked questions about travel programs and credit card hacking.

The Atlantic’s Derek Thompson stops by The Compound to discuss how and why things go viral:

Morgan Housel says the amount of progress we’ve made during most of our lifetimes is both astounding and overlooked

From BuzzFeed News, tech’s biggest flops of the decade included failed Kickstarter projects, flammable gadgets, and investment bubbles.

This time of year is filled with economic predictions and forecasts. Forget it – here’s why stock market predictions are less than worthless.

Here are some more useful New Year’s resolutions for investors, from a behavioural scientist:

“Sticking to your principles and enjoying the long-term benefits of compounding sounds easy, but the behavioural realities of investment means that this is far from the case. Doing nothing requires a great deal of effort.”

PWL Capital’s Ben Felix takes down Dave Ramsey’s shockingly bad investment advice in his latest Common Sense Investing video:

David Aston explains why some people can put off savings until their 50s and still meet their retirement goals.

Rob Carrick highlights trends of the past decade that made investors smarter and richer, and how they can do the same in the 2020s.

A wild read about Canada’s lost loonie: A coin that was supposed to be much different than the one we know today, altered after a mysterious theft in 1986.

Finally, meet Kevin Kelley, the man who’s going to save your neighbourhood grocery store.

Have a great weekend, everyone!

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10 Comments

  1. Maria @ Handful of Thoughts on January 4, 2020 at 3:11 pm

    Great round up Robb. I love the consistency in your goals. Even though your work situation has changed you have opted to keep things consistent. This should really help you in attaining your goals.

    • Robb Engen on January 6, 2020 at 10:05 am

      Thanks Maria! I guess if it ain’t broke, don’t fix it. Our plan has taken us this far, we might as well keep it going!

  2. Pam on January 6, 2020 at 9:56 am

    I am just curious about your wife’s TFSA? Are you working on maxing out hers as well?

    • Robb Engen on January 6, 2020 at 10:07 am

      Hi Pam, she’ll be making a large RRSP contribution this year, which will catch up all of her unused room. Then she’ll work on her TFSA starting in 2021 with the same $1k per month approach that I’m taking with mine.

  3. Mr Fundamental on January 9, 2020 at 3:54 pm

    These are awesome goals! I feel like many of your goals are similar to mine. I am a bit jealous of your goals #5 and #6. 🙂

    Regarding Goal #4: Max out RESPs, I’ve been focusing on this one for quite a while (my kids are 9/7/7). You can check out the story here if you have the interest/time:

    https://mrfundamental.com/2019/12/07/mr-fundamental-takes-a-road-trip/

    Cheers!

    • Robb Engen on January 10, 2020 at 8:33 am

      Hey Mr. Fundamental, thanks for stopping by! Yeah, #5 and #6 are goals I’ve been working towards for a while now and I’m interested to see how they play out this year and into the future. So far, so good now that the kids are back in school.

      Nice story on your RESP savings! We’re also invested in TD e-Series funds for the same reasons you are.

  4. Bob Wen on January 10, 2020 at 7:26 am

    Excellent goals Robb!

    In total, how much have you budgeted for your annual travelling goal of “three international trips and one Canadian trip”? The reason I’m asking is to get some idea of what we’ll need to budget if we aim for something similar. Also, what’s the approximate total nights count?

    • Robb Engen on January 10, 2020 at 8:43 am

      Hi Bob, thanks so much! It’s tough to say how much we’ll spend on these trips. As I mentioned, we booked our flights to Maui and to Italy last year (on points), and booked and paid for half of our accommodations there last year as well. So I’ve budgeted $4,000 to cover the remaining accommodation charges this year.

      I don’t include a specific travel budget for groceries and dining, since we’d be doing that anyway if we were home.

      I’ve got another $8k in our travel budget, so once I have a total for all the attractions, car rental, train travel in Italy then I’ll see what we have left over to book flights and accommodations to another destination or two.

      Maui – 7 nights
      Italy – 18 nights

      I’ll keep you posted if/when we book another trip.

      Where do you plan on going this year?

  5. Bob Wen on January 11, 2020 at 9:06 am

    Robb: I need to look more at these credit card points. We ran $33.6K through our PC Financial World Elite MasterCard in 2019 and we earned just $310 in free food – which is as good as cash to me. However, because we get our vehicles’ gas, ($3,850 in 2019), from the Co-op gas stations in Manitoba, we also get an annual cheque from them of around $250. I mention the Co-op gas because many of the other cards give you extra cash back/points for using Esso, so that’s complicating my decision on which card to choose. We also don’t shop at Safeway, which seems to be another complication; lower cost food or more points!

    Anyway, this year I’ll be working until June for sure, and then we’ll be off to Europe for two to three months of slow travel. Our budget for travel costs in the following years (excluding food as we pay that wherever we are) is $22K indexed to inflation. I’ve been wondering how much we’ll be able to do with that amount, hence my question.

    • Bob Wen on January 11, 2020 at 9:17 am

      …If we move to a different credit card(s), we’ll still be able to get our gas from the Co-op of course, but the points earned on these other credit card(s) are, or might be, boosted by requiring you to get your gas from non-co-op locations, thus losing the annual $250. Winter is well and truly here (-28C as I type), so perhaps I’ll make working this out my winter project.

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