Hey everyone, welcome to this post on our 2022 financial goals. Study after study has shown that setting written goals are important for achieving success because it keeps us accountable and motivated. Each year, my wife and I discuss the past year and where we see ourselves 1 year from now.
First off, each year we max out the kids’ RESPs (education savings plan) so we get the 20% match from the government.
Goal #1 Pay Off Mortgage!
A big part of our annual financial plan has always been paying off debt. Tackling debt starts with eliminating any consumer debt, then student loans and car loans, and eventually tackling the biggest debt of all: the home mortgage.
2022 will be an important year on our journey to financial freedom. On July 1st our home will be completely paid off…no more mortgage! This will dramatically reduce our cost of living by at least 50% given our aggressive pay off strategy. Having a paid off home has so many benefits and if you’re curious why we made that decision check out our Top 7 Reasons for Paying Off Our Mortgage.
Not only will our paid off home give us all sorts of giddy feelings, but it will free up a substantial amount of household cash flow. For years, we’ve paid extra weekly payments and whenever we received tax returns money, bonuses or any other windfall money, it went to slay the mortgage beast. Now that money will be directed toward filling up our Tax Free Savings (TFSA) and retirement accounts.
Goal #2 Contribute $25k to Retirement Accounts
Typically I’m able to contribute around $10k to my RRSP and each year I max it out. So after the RESP and RRSP contributions, I estimate that I will be able to contribute approximately $60k to my TFSA.
My wife has a bit more contribution room in her RRSP so the plan will be to optimize her contributions which we estimate to be approximately $15k and send the remaining amount to her TFSA (approx. $15k).
Goal #3 Contribute $75k to TFSAs
We have nearly $200k contribution space available in our TFSAs so, realistically, I think it will take us at least 1 year once the mortgage payments are done to replace that money. So our most challenging financial goal will be to contribute as much as we can to our TFSAs.
Goal #4 Set Aside $5k for Kids Education
University and College tuition is super expensive and likely to get even more expensive in the future. So it makes sense to save early for our children’s post-secondary education. Plus as a bonus incentive, the government kicks in 20% on top of $2,500 per child.
2022 Will Forever Change Our Household Finances
A paid off home and rebuilding our TFSA investments will have a big impact on our finances and overall financial well-being. I can’t stress the benefits I see from a completely paid off home.
The TFSA contributions should go a long way to restore some of our passive income from investments that we sold last year to pay off the mortgage. So overall, while it was hard to sell our dividend paying stocks to pay off our home, I think in the end we made the right choice and the long term benefits far outweigh the short-term impact on our passive investment income.
So that is the breakdown of our 2022 financial goals, we hope it inspires all of you to think about your finances and to challenge yourself to reach your goals.