Financial Consumer Agency of Canada
Symbol of the Government of Canada

Financial Consumer Agency of Canada

www.fcac-acfc.gc.ca

 

Breadcrumb

  1. Home
  2. > For Consumers
  3. > Choose a Life Event
  4. > Starting your First Job
  5. > Updating Your Financial Priorities

Updating Your Financial Priorities

 

Now that you are starting your career, you may find that your situation requires a new approach to your finances.

Once you’ve started your new job, review your financial situation:

  • Start contributions to your employer’s savings or retirement plan as soon as possible.
  • Sign up for your company’s life insurance plan or buy life insuranceif you have dependants (spouse, children) or if you think you need it.
  • Review your disability insurance needs.
  • Start an emergency fund for unexpected events. It should cover your living expenses for three to six months.
  • Make a will.

Most employers will deposit your pay directly to your chequing or savings account. If you haven’t already done so, consider setting up accounts to help you manage your finances. There are many choices available. FCAC can help you learn more about personal banking. Use our Savings Account Selector Tool and Banking Package Selector Tool to help you find the best service package for you.

Needs versus wants

A budget helps you manage your finances over the long term so that you can reach your financial goals, whether saving for a down payment for your first home or paying off debt. If you have loans or other debt, remember to plan for the payments and include them in your budget. Get started with FCAC’s Budget Calculator.

Your budget should be based on your net pay after deductions. Start by listing necessary expenses, such as rent, groceries, utility bills and loan payments.

Next list your wants or variable expenses, such as eating out, clothes, travel and entertainment. Don’t forget to include your “small” expenses such as coffees, snacks and magazines. They all add up!

If your net pay is not enough to cover both your needs and your wants, you may have to consider cutting back on your wants or reducing the amount you spend on them. If you have a surplus or money left over, consider creating an emergency fund or putting it toward saving for one of your financial goals.

Setting financial goals

Now is also the time to set some short-term and long-term financial goals, and make a financial plan to pay for them.

If you do not plan how you want to spend your money, you will find that your money goes to waste month after month. Knowing exactly what it is you want is the first step in creating your financial plan.

Where do you want to be financially in the next year, 3 years or 10 years? For example:

  • Do you need to pay off any outstanding debt?
  • Do you plan to change your living arrangements? Perhaps you want to move out on your own? If so, what will you need to buy to furnish your home?
  • Do you plan on buying a car?
  • Do you plan on travelling?
  • Do you plan on continuing your education? How much will you need to save for tuition?
  • Do you plan on owning a home? How much will you need to save for a down payment?
  • Do you plan on getting married? How much will you need to save for a wedding?
  • How much do you want in retirement savings? At what age do you want to retire?

Make a list of your goals and identify timelines for each of them:

  • short-term goals (within one year)
    - Example: saving for a big-ticket item, such as a TV
  • intermediate goals (one to three years)
    -Example: purchasing a car or paying off debt
  • long-term goals (over five years)
    - Longer commitments that generally require more money.
    - Example: saving for retirement.

You can use this checklist as a starting point to help you identify and prioritize your financial goals.

 

Estimated amount needed ($)

By (date)

Short-term financial goals (within 1 year)
e.g. an emergency fund for unexpected expenses

 

 

 

 

 

 

 

 

 

Total:

 

 

Medium-term financial goals (approx. 1-3 years)
e.g. paying off debt or purchasing a car

 

 

 

 

 

 

 

 

 

Total:

 

 

Long-term financial goals (approx. 5+ years)
e.g. a comfortable nest egg for retirement

 

 

 

 

 

 

 

 

 

Total:

 

 

It’s important to start thinking about your financial goals and saving toward them now. Make saving and debt repayment part of your budget and financial plan. Saving to achieve your goals will keep you out of the debt trap. Begin by taking 5 percent to 10 percent out each time you are paid, and put it in a savings or investment account.

Look into different investment options. For example, high-interest savings accounts, mutual funds or personal investments may make your money grow faster. Setting up an automatic transfer from your savings or chequing account is a great way to get started.

Remember to review your progress regularly (at least twice a year) to determine whether your program is working. You can adjust the time frames if necessary.


Related Topics

No FAQs information related to this topic.

Footer

Date Modified:
2013-01-31