Topic: Money and Finances F1.3 – Meeting Financial Goals

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Meeting Financial Goals

 

When you set a goal and make a plan for achieving the goal, things might not always go according to plan. Sometimes, you might make progress faster than you expected. Other times, situations might come up that slow down your progress, so achieving your goal might take longer than you expected.

Let’s take a look at a few things that can speed up or slow down progress in meeting financial goals.

 

Changes in Income

When a person’s income goes up, it might be possible to achieve a financial goal more quickly than expected. Things that can make a person’s income go up include getting a job that pays more, getting a raise, making money on an investment in stocks, and receiving an inheritance.

If a person’s income goes down, it might take longer to achieve a financial goal. Someone who is paid hourly might have the number of hours they work each week cut back by their employer. Someone who loses a job might receive money from Employment Insurance, but this insurance pays less than the person was making at their job. Less income can mean less money to apply to meeting financial goals.

Changes in Expenses

If a person’s expenses increase or decrease, this change can affect their progress in meeting financial goals—especially if there is a big change in expenses and the change is unexpected. For example, a person’s basement might start flooding when it rains. Repairs are needed to the house’s foundation, and these repairs are expensive. Paying for these repairs means the homeowner’s expenses have gone up.

Expenses can also decrease. For example, Mrs. Sharma and her husband each needed a car to get to work. Then, Mrs. Sharma got a job that is within walking distance from her home, so she no longer needs a car. Mrs. Sharma sells her car. The couple’s expenses have now gone down because they are no longer paying for gas and car insurance for a second car.

Changes in Priorities

People’s priorities in life are the things that are most important to them. Some priorities, such as staying fit by working out at a gym, involve expenses—such as the monthly fee for a gym membership. The more important something is, the more willing people are to spend money on it.

A change in priorities can affect someone’s financial situation. For years, the Wilsons have made it a priority to save money to buy a cottage on their favourite lake. Recently, the price of cottages has gone up so much that the Wilsons realize they can no longer afford one. When they decide not to buy a cottage, they no longer need to save for one. There has been a change in their priorities. Now, they can take the money they were saving for a cottage and use it to help them achieve other financial goals.

Changes in Health

Sometimes, people develop health problems that affect their financial situation. For example, Ms. Lapointe has worked for years driving a taxi during the day. On days when business is slow, she might work long past dark to meet her daily goal for how much money she makes. Now that she is getting older, Ms. Lapointe finds that she is not able to see as well at night. For safety reasons, she gives up driving after dark. The change in Ms. Lapointe’s vision has meant a decrease in her income.

Planning for an Uncertain Future

Nobody knows what will happen in the future. Financially, people may find that they are better off or worse off than they expected to be. The financial planning that people do should take into account possible future changes—whether good or bad—that might affect their finances. Some people use a professional financial planner to help them plan for various kinds of changes that might affect their finances in the future.

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