A millennial challenge of juggling financial goals

Millennials may have multiple financial goals, which means saving enough and figuring out how much to dedicate to each need.

Imagine an individual or couple who are making large mortgage payments, contributing to their young child’s Registered Education Savings Plan (RESP), paying off their car loan, building an emergency fund, contributing to their Registered Retirement Savings Plan (RRSP) and saving for a summer vacation.

Meeting numerous goals can be a challenge in itself, but you don’t need a long list of goals to face a dilemma. A younger millennial could be diligently saving for a down payment and wondering how important it is to also save for retirement right now.

A strategic plan is essential

Someone trying to manage multiple goals on their own can be serious about saving yet still fall short of achieving all their goals.

One reason is overcommitting to a near-term goal. This temptation is an easy trap to fall into, simply because it’s the first savings goal to reach. The problem is underfunding long-term goals and losing out on the potential for growth and compounding, which relies on starting early.

Another trap is to spread savings too evenly among all goals. This makes the process easy but increases the risk of falling behind on certain objectives.

You need a strategic plan, which we can help you develop and carry out. A proper plan distributes your monthly savings to meet short-term and medium-term financial goals, while staying on track to achieve long-term goals.

The first step in the process is working together to make a list of your current goals and categorize them by time horizon—when you’ll need the money you save.

Next is the math and deliberation. Typically, your goals with a defined financial objective should be broken down into an amount to save each year or month. Then comes the give and take as you account for the amount you’re actually able to save and invest. With our assistance, you can also account for how expected investment growth can help you achieve each financial goal. Ultimately, you must stay on top of needs without sacrificing important wants and ensure that meeting short-term goals doesn’t put long-term goals at risk.

It’s a balancing act to be sure, but the result is a manageable savings plan for each goal—and you benefit psychologically, not just financially. A properly conceived plan can make you feel in control, instead of overwhelmed.

Aligning goals with investment vehicles

Sometimes, choosing the appropriate investment vehicle for each goal is straightforward. For example, the relatively new First Home Savings Account (FHSA) can be an obvious choice for many future homeowners to save for a down payment.

However, choosing the best vehicle is often based on an investor’s personal situation. One person might use their Tax-Free Savings Account (TFSA) for an emergency fund, while another uses their non-registered account for an emergency fund because they use their TFSA to complement their RESP. An investor saving for retirement might choose their TFSA because they’re currently in a lower tax bracket than they expect to be in retirement, while another investor chooses an RRSP because they want to take advantage of the tax deduction and wish to contribute more annually than a TFSA allows.

We work with you to align your goals with the right vehicles for you and ensure that the investments within each vehicle suit your objective, time horizon and risk tolerance.

Canadian population by generation

Generation Alpha	4.2 million
Generation Z	7.7 million
Millennials	9.2 million
Generation X	7.4 million
Baby Boomers	9.1 million
Interwar Generation	2.4 million
Greatest Generation	76,000

Source: Statistics Canada, “Population estimates on July 1, by age and gender,” 2023