Financial goals and their purpose
Financial goals make managing your money easier
Your financial goals are generally based on a specific future want or need. This may include:
- a family vacation;
- having a comfortable retirement; or,
- being able to deal with a financial shock like a loss of income.
When setting your financial goals, it’s important to always cover your needs before your wants.
A need is a necessity, something that is essential for living. Examples include shelter, groceries and basic clothing.
A want is a desire, something that is non-essential for living but that you would like to have. Examples include vacations, restaurants meals and non-basic clothing.
Setting financial goals is an important step toward post-insolvency financial success. Achieving a goal can be very rewarding, personally satisfying and motivating. It can be a great confidence builder.
Throughout this module you will learn about why you should set financial goals. Later in the module, you will work through an exercise to set your own personal financial goals.
Financial stability and security
Let’s take a moment to review some background material before moving on to setting your financial goals.
Financial stability and security are crucial elements for financial well-being and a positive financial future. Many financial goals are guided by the priority of financial stability and security. As you are completing the module, make sure to thoroughly consider these priorities. The module will discuss strategies to help you achieve and maintain financial security and stability.
Financial stability is the ability to manage financial risks and absorb financial shocks. It provides you with the ability to bounce back from, or withstand, pressure, change or stress related to your finances.
Financial security is the peacefulness you feel when your income is enough to cover all of your expenses. It suggests that you have enough money coming in to cover emergencies and your future financial goals.
Financial stability and financial security are foundational pieces required to have a healthy relationship with money. In this section, you will learn how to evaluate your financial situation and review situations that could pose risks to your financial stability and security.
Please take a moment to review the common risk factors listed below and think about how they affect you:
- whether you are a one- or two-income family,
- whether you or your partner have a long-term illness,
- whether or not your income is predictable or stable,
- whether you have job stability or a lack thereof,
- whether or not you have paid sick leave,
- whether or not you have workplace disability insurance; or,
- whether or not you have the ability to skip mortgage payments.
Understanding your financial risk factors is the first step in reducing the impact of unfortunate and unforeseen events. Setting financial goals can help you to protect your financial well-being against certain financial risk factors. The next section will teach you about some common ways to reduce these risks.
If you have questions, write them down and bring them to your in-person counselling session.