The great J. Money posted the 7 money goals to hit by the time you’re 35 the other day. Given that I am 35, turning 36 later this year, I thought this would be the perfect opportunity to make sure I am well set up when it comes to money goals. In case you are wondering, the idea originally came from a post on Business Insider. The 7 goals listed below are actually attenable and realistic and not just some fancy somewhat unattainable goals that you typically see in the personal finance community. For examples, like you should have x amount of net worth by 35, or you should have x amount saved up by 35.
The 7 goals are:
1. Have a growing net worth
Check. Mrs. T and I check our net worth every quarter. For the most part, our net worth increases every quarter. There have been a few times where we saw a slight drop in our net worth, usually caused by drops in the stock market. Since we are heavily invested in the stock market, both dividend-paying stocks and non-dividend paying stocks, it makes sense that our net worth has close correlation with the stock market performance.
2. Be paid your value
I think so. A number of years ago I asked for a significant raise because I was severely underpaid and ended up with a raise of over 30%. Comparing my full-time salary with the nationwide average on sites like Glassdoor, I think I’m being paid my value at my current position today. However, the Canadian nationwide average is certainly much lower than the US average. If I really want to get paid, I would move down to Silicon Valley and join one of the high tech companies.
When it comes to side businesses, I think I’m being paid for my value as well. I charge $129 for an hour of financial coaching service which I think is very fair for me and my clients. For my photography business, my wedding rate starts at $1,600 and portrait rate starts at $350. Again, I believe this is a very fair price for both me and my clients.
A long time ago, I learned a key lesson on setting a rate for your business – you want to set the rate so you don’t feel like you’re getting ripped off by performing the service. You also want to set the rate so you don’t feel like you’re ripping off your clients.
Another key thing to consider for side businesses is that ideally, you want to set your hourly rate to be higher than your full-time job hourly rate (if you have one) so your side businesses are worthwhile to your time.
3. Be able to float yourself for three to six months
Check. We have sufficient savings to float for three to six months. If I happened to get laid off, the severance package should last us a number of months. We are getting over $1,500 per month in dividend income and about 50-60% of that amount is in our TFSAs or taxable accounts. This means we can tap into a portion of our dividend income if we really need to. In addition, I can also get some money from the Canadian employment insurance if I were unemployed.
In case you are wondering, we don’t have an emergency fund. We have an account called opportunity fund instead. We believe that if we focus on “emergency” we’ll end up with more emergencies.
4. Be dedicating at least 20% of your income to short and long-term goals
Yup. We save a large portion each month toward the Financial Freedom Account. We also save a large portion each month toward the Long Term Savings for Spending account. It’s certainly not a coincidence that we managed to invest over $50,000 in 1H for 2018.
In case you are wondering, I am not going to mention the exact percentage that we save each month for FFA and LTSS due to privacy reasons. Sorry (saying sorry if very Canadiana hehe).
5. Have a network of trusted financial source
Check. This is why I love the personal finance community. There’s a vast amount of resources out there. I am learning every day from fellow personal finance bloggers. Furthermore, the local libraries have excellent personal finance and investment books I can borrow for free.
If I have questions about FIRE I can talk to my dad who retired in his 40’s and my cousins, one of them retired at 41 and another reached FI in her 40’s. Or talk to other FIRE bloggers for their advice.
6. Start taking insurance more seriously
I think so.
Before Baby T1.0 was born, Mrs. T and I enrolled ourselves in 25 years of term life insurance. We are insured at a different amount and if the unthinkable were to happen, we believe the person still alive and the kids will be well taken care of with the life insurance payout. We also have insurance for our car, our house, and personal properties.
I am very glad that we live in Canada where you automatically opt-in for health care. No need to deal with messy health insurance and understanding all the rules. We are very lucky this way.
7. Consider a very basic estate plan — especially if you have children
It took us years but Mrs. T and I finally have a separate will outlining what we want if we were to pass away. Getting our wills done cost $560 with a lawyer (we got a friend discount), a bargain considering a notary place we checked was charging upward of $2,000 for the two of us.
Thanks to using a lawyer who specializes in drafting wills, completing our wills was an easy process, much easier than we anticipated. We just listed out our wishes and appoint key people like the executor and the guardian. If you don’t have a will today and you have children, I highly recommend getting this done ASAP!
Although this test was meant for a 35-year-old to complete, I believe it’s a good test for any age. If you happened to have your financial epiphany in your 20’s and not yet 35, hopefully, you got at least 5 or 6 out of 7 (if you don’t have kids and not married, will and life insurance may not be necessary). Now if you are older than 35, hopefully this test is a good reminder to get the basics completed.
Dear readers, how did you do with this test? Wanna share our results and your age?