New Savings Goals for 2014

May 28, 2014

gold piggy bank

At the beginning of the year, I made some pretty lofty savings goals for myself. After two years of allocating anywhere from 25-55% of my monthly budget for debt repayment, I was certain I could allocate 33% for savings in 2014. The first thing I wanted to do was top up my Emergency Fund to my $10,000 goal. Since I already had $2,300 saved, my goal was to save the other $7,700 in 2014 – or $642 each month. On top of that, I also randomly decided that I wanted to save $5,000 for retirement, which meant I needed to save an additional $417 each month.

We’re five months into the year now and, if you’ve been following any of my monthly budgets, you know I have not been meeting my targets. Being a bridesmaid in my girlfriends’ wedding in April took a huge bite out of my budgets in the months leading up to it, and I finally shared last week how the car accident has been affecting my finances too.

When I finally added up how much I have actually saved so far this year, and compared it to my goals, the shocking truth was that I’m seriously behind. In fact, if I still wanted to try to reach my original goals by the end of the year, I would now need to allocate 41% of my budget for savings – from $1,059/month up an additional $266 to $1,325/month.


Yea, that won’t be happening anytime soon.

So, now the question is: where do I go from here? Do I put everything I can into my Emergency Fund until I reach my goal, and then move onto saving for retirement? I put a lot of thought into that and seriously considered it. I know seeing the balance of that account hit 5-digits will be an incredible feeling. However, as I mentioned last week, I’m sick of only focusing on one goal at a time.

The problem with only working on one financial goal is that it leaves you vulnerable in other areas of your financial life. For example, when I was paying down my debt, I was barely saving any money. If I’d lost my job, sure, it would’ve been great to not have much debt, but I also wouldn’t have had any savings to help support me until I found a new one.

Now, let’s say I decided to stop saving for retirement and just focus on reaching my Emergency Fund goal. If I failed to meet just one of my monthly savings goals, not only would I be pushing back my Emergency Fund goal date but I’d also be pushing back the date when I would finally start saving for retirement again; that one realization made my decision for me: I need to save for both.

The final question: how much should I save? It’s obvious the numbers I outlined at the beginning of the year were unrealistic. However, it’s also a little sad to think my Emergency Fund may not hit 5-digits this year. But after two years of stretching my budget and, at times, living on less than half my income, I want to finally learn how to live life on a balanced budget – one that lets me save and spend guilt-free.

Going forward, I’ve decided to allocate 10% of my budget to each goal, for a total of 20% or $640/month.


This means I’ll only have $6,810 in my Emergency Fund at the end of the year, and I’ll contribute $1,600 less to retirement than I wanted to… but it’s realistic and something I can actually stick to – long-term.

How have your savings goals changed this year?

Flickr: pt101

  • Trista May 28, 2014 at 4:22 am

    That seems like a very sensible way to change your savings goal. You’re doing awesome!

    I’ve got my priorities a little out of whack right now. I’m very behind on the savings for my trip so that will take all of my available money until the first week of September. So my Emergency Fund is on the back burner for now unless there is some change in my income (another side hustle or a reduction in household bills). I’ll start small in September but ramp it up come January.

    This year I started saving for a down payment on a house. Owning a home is something I go back and forth on so for now I’m only placing “found” money in to this account. For now it’s mainly cash gifts: a couple from my grandmother when she wins Bingo (she says she won’t win again unless she shares her winnings), one from a friend for letting her live with me for three weeks and soon one for baking cupcakes for a friend who is hosting a baby shower. There still might be another from my dad for watching his cat when he goes on vacation. Right now it’s sitting at $460. I’m housing it in an RRSP as I plan to take advantage of the home-buyers plan. Also because it’s in RRSP I can’t dip in whenever I like so it is helping me keep the money there and my greedy little hands off of it. :)

    • Cait Flanders May 29, 2014 at 9:06 am

      Interesting! I’m going to start saving for a down payment as soon as my EF is topped up. I don’t plan on using the RRSP HBP though. Instead, I’m going to save it in a TFSA portfolio. But more on that later. Good luck with saving for the trip! :)

      • Trista May 29, 2014 at 11:13 am

        Since I have a pension at work I’m not that concerned about withdrawing from my RRSP for the HBP. I plan to use my TFSA for my emergency fund and general long term savings after that. I’m sure if I do buy a house down the road some of the money that’s sitting in the TFSA will go to things like closing costs and maybe to top of the downpayment if it goes over $25,000.

        Another one of the reasons I decided to use an RRSP is I can benefit from the break on my income tax as I am not making contributions intended for retirement in the RRSP at this time. I plan to take any tax return I get and deposit it in to the RRSP to help boost the savings (I’ll actually get a return next year where I gave up my second job). I’ve got a few plans on how to boost my contributions next year as well depending on a couple of possible life changes on their way.

        I’m not sure if it’s the right path. So I’ll be monitoring how it works for me.

  • Elizabeth May 28, 2014 at 4:48 am

    This may sound like an odd strategy, but have you considered putting some of your emergency fund in an RRSP? (Manulife has a high interest savings account RRSP at 2%).

    An advisor suggested this to a friend of mine when she was worried about her job but wanted to keep to her retirement savings plan on track (she was topping up her RRSP at the end of the year to meet her goal). The thinking was that if she lost her job and needed the money, she would be withdrawing it at a lower tax rate than when she put it in. If she didn’t need the money, she could invest the tax refund and later move that RRSP into a higher-earning RRSP vehicle.

    Also, you don’t have to put the money into an RRSP right now — you have until the beginning of March next year. In your shoes, I’d be tempted to save a healthy chunk of money each month in a TFSA and then decide in 2015 if you want to top up your RRSP.

    One thing I’ve learned is that financial goals have to be flexible when you have more than one. Whether you put money in a RRSP or an emergency fund, you’re still increasing your financial health and that’s the important thing.

    • Cait Flanders May 31, 2014 at 10:52 pm

      I’ll actually be changing my entire retirement savings strategy in the coming months, so there’s no point in me answering the RRSP question just yet! (More on that soon.)

  • Alicia @ Financial Diffraction May 28, 2014 at 5:04 am

    I think that’s way more reasonable. In theory it’s nice to be super gung-ho, but in reality it ends up with too much pressure and not enough room to live life. There’s no point in crazy-fast money accumulation if you’re moaning and unhappy with the process (PS, I’m not saying you’re moaning/complaining).

    Re: Elizabeth’s comment about putting your Emergency Fund in the RRSP. My biggest concern with that is losing your contribution room when you go to withdraw it if you have an emergency. Perhaps that isn’t a concern to some people who have extra RRSP contribution room, but I intend to get to a point where I’ve used it all up :)

    • Cait Flanders May 31, 2014 at 10:54 pm

      Well, I think the “reality” is just that I want to save money AND have a life, haha. Paying down debt at the rate I did wasn’t fun… so why would I want to continue doing the same with saving money? The fact is I have nearly 5K in the EF already, and I’ll likely come into a chunk of money at some point this year that I can top it up with. So, I’m going to seek balance, until then. :)

  • Kate@GoodnightDebt May 28, 2014 at 6:05 am

    With “only” contributing 20%, you miss your original yearly goal, but in the grand scheme of things, you don’t miss it by that much. You are doing great!

    I’ve noticed that when I give myself extra cushion room in my budget, I don’t spend my whole cushion. I just spend enough for me to feel like I can breathe. 20% may be your new goal, but I wouldn’t be surprised if you save more than you plan.

    • Cait Flanders May 31, 2014 at 10:57 pm

      Thanks, Kate! I’ve actually decided I’m less worried about meeting my goals for the year now, because saving 20% of my income each month will feel pretty darn good in itself! (And you’re right – I’m going to save all my freelance income!)

  • Tonya@Budget and the Beach May 28, 2014 at 6:32 am

    I think that sounds reasonable. My financial goals and overall goals have changed a lot already. For one I wasn’t expecting a car payment-grrr! But the point of a budget is to be flexible and tailor it to your needs as you needs change.

    • Cait Flanders May 31, 2014 at 10:58 pm

      That’s exactly right, Tonya. How is your little car doing, BTW? :)

  • Nadia May 28, 2014 at 7:31 am

    My savings goals are pretty small at the moment as I’m paying of my student loans and credit card.

    I could put the $200 a month ($50 each to Emergency, Birthdays/Christmas, my TFSA and Longterm (future dental work, etc) towards debt repayment but then I won’t have anything for when I need it.

    I think I’ve found a balance between debt repayment and savings at this time. It meant sacrificing RRSP payments for the moment but as soon as I can get a chunk of my debt paid off Hello RRSP contributions.

    • Nadia May 28, 2014 at 7:34 am

      I also find that treating my savings like a bill really helps me save my money. I have it set to automatically take out the money every paycheck. That way I can’t spend it. I know it’s coming out so I leave that money alone.

    • Cait Flanders May 31, 2014 at 10:59 pm

      Good way to think of it, Nadia! And it’s great to hear you’ve found a balance between saving and paying down debt. :)

  • John C @ Action Economics May 28, 2014 at 7:46 am

    I often set lofty goals like you do, sometimes I meet them sometimes I don’t. The timeline isn’t what matters, what matters is that you are working towards your goals. I get a little frustrated when I don’t meet my timelines, so I force myself to look back at where I was a year ago, 5 years ago, 10 years ago. Doing this shows that even if I didn’t get it done when I wanted to, I have still come very far. I like your idea of working both goals at the same time.

    I delayed saving for retirement until we had a full emergency fund and purchased a house with 20% down. Because of this at Age 28 I have very little saved for retirement, but now I can throw a lot of money at it each month. Currently we are putting 20% of our money into retirement accounts.

    • Cait Flanders May 31, 2014 at 11:00 pm

      Ok, if I think back to who I was 10 years ago – or even 5 years ago – I can honestly say I never thought I’d be who I am today, haha. So thanks for that reminder!

  • Morgaine May 28, 2014 at 7:52 am

    I’ve definitely been giving a lot of thought lately to my savings goals (and a post will be coming shortly). I think you are doing great and balance is a huge lesson we all need to learn after paying off debt. Don’t be too hard on yourself, Cait, you’re doing an awesome job! :)

    • Cait Flanders May 31, 2014 at 11:02 pm

      I’m not being hard on myself. Actually, I’d say I’m doing the opposite. Rather than continually feeling bad about not meeting my original goals, I’m setting new ones that are more attainable. Achieving a goal is much more motivating than always feeling like a failure!

  • Melanie@Dear Debt May 28, 2014 at 7:52 am

    You are still doing so well! My savings has stalled as I am aggressively paying off debt. I am putting $50 more towards retirement (for a total of $100) each month and still save for my EF, travel, and tax funds. Automation really works for me!

    • Cait Flanders May 31, 2014 at 11:02 pm

      Good to hear, Melanie!

  • Shoeaholicnomore May 28, 2014 at 8:43 am

    My savings goals for this year haven’t changed, but my debt-payoff goal did change. I didn’t hit my goal in Jan, Feb, March or April, so I changed it. Originally, I wanted to pay off $10k of debt this year, but now I’ve changed it to $7.5k. I think it’s still a good number for me. Thanks for telling us about how you’ve changed your goals. I think it’s important for people to know that we don’t succeed all the time and we have to change our goals to make them more attainable and realistic.

    • Cait Flanders May 31, 2014 at 11:03 pm

      Happy to share! Thank you for doing the same. :)

  • Michelle May 28, 2014 at 9:00 am

    Both my savings goals and debt repayment goals have already changed this year. I think I’m saving too much money right now and because my debt has gone up slightly, I”m going to have to back off on savings so I can increase my debt repayment.
    I wanted to eliminate my debt by August and because I thought I would be a gifted person and add to it, now I have to cut back on saving until its gone.
    It looks like you’ve got a great plan and you’re going to have at least something saved which is better than zero! :) Life always likes to throw us curveballs!

    • Cait Flanders May 31, 2014 at 11:04 pm

      Hey, if you have some money in savings already, then taking a couple months off to wipe out your debt seems ok to me!

  • Rob May 28, 2014 at 1:35 pm

    Sounds like you’re on the right track, Cait, just so long as your ongoing lifestyle can be maintained comfortably with the target monthly savings that you have budgeted for. Like yourself when I was younger I split up my savings deposits to address multiple goals. In my case I decided to prepay down my mortgage as well as put monthly deposits against my RRSP, I felt that my emergency fund (if ever needed to be used – and over 45 years never has) could be funded through my pre-approved $50K Line of Credit fund. Also, just to add, I feel it’s best to contribute monthly to an RSP, rather than in an annual one-time chunk, because then you benefit from dollar cost averaging, thereby increasing the value of your RRSP contributions.

    As for me, my savings goals vary from year to year, depending on whatever retirement project(s) I happen to be interested in – this year being driveway repaving and interior house painting – all planned out of course depending on our discretionary cash flow. We’re not dipping into our RRSP funds until we are forced to, when converting to RIF plans at age 71, at which time the feds will force us to take out a minimum amount each year and start paying tax on it. In the meantime, we just let the RRSP funds grow and compound. And that, my friend, is why one should start as early as possible to contribute to RRSP and TFSA plans – time is your best friend with compounding is involved.

    • Cait Flanders May 31, 2014 at 11:07 pm

      It sure can! I’ve drawn up rough budgets for July and August already (June is done) and these savings goals fit in perfectly. The only thing I don’t know how to budget for is some extra money I’ll be earning through freelance writing. Since I don’t know exactly how much/how often I’ll get paid, I’m NOT going to budget for it – but will toss 100% of it into my EF and update the balance in the sidebar.

  • Leigh May 28, 2014 at 3:35 pm

    I totally agree about splitting the savings as you’ve done. It seems quite reasonable, simple (which is always awesome) and I imagine it will feel quite good when you get there in December. :)

    I’ve currently been trying to pay off my credit card before I owe interest on a balance transfer. I have 3 paychecks to do so, and the amount would be 65% of each of my paychecks to do it. I did a quick interest calculation, and I think if I let myself take up to 5 paychecks, it will only accumulate about $18 in interest. So I think I’ll do that. It will still be a large chunk of my pay (about $45-50%) and I have 4 other debts, but I want it paid off before I go on a vacation in August. I want to be credit card debt free when I go so I can enjoy myself! And I think trying to avoid $18 in interest is NOT worth all the stress (and ebaying) knowing I can get there just a paycheck or two later.

    Oh, I’ve also been putting 1% of my pay in my RRSP and my EF each. I don’t want those lines to disappear from my mind. I have a pension at my current job, but I have lots of room I can use! :)

    • Cait Flanders May 31, 2014 at 11:09 pm

      I don’t know your exact numbers, but I do know that if you can’t pay off a balance transfer in full by the due date, you will be charged interest on the entire amount you originally transferred – not just what’s leftover. So just wanted to warn you of that!

      • Leigh June 1, 2014 at 8:08 am

        Thanks for letting me know! I switched to an Alberta bank which has been surprisingly nice. They have posted “interest on remaining balance” but I think I’ll take your advice and see if I can get that sucker paid off by mid July!

        • Cait Flanders June 1, 2014 at 6:24 pm

          No problem! Just want to make sure you don’t get screwed over… it would be awful to have to pay all the interest!

  • Kassandra May 28, 2014 at 6:58 pm

    You are being quite reasonable and sensible with your savings allocation and you have to do what feels right for your situation. This year I’ve had to re-allocate some of the amount I was saving each month towards living expenses since my move to NY and getting a new apartment/utilities etc… not fun but necessary. i still believe I am on target for maxing out my retirement accounts this year but I’ll know better in a couple of months from now.

    • Cait Flanders May 31, 2014 at 11:10 pm

      Sounds like you’re doing great, Kassandra!

  • Clare May 28, 2014 at 8:38 pm

    I’m kind of the queen of setting unattainable goals and then never reaching them, even halfway. Not to be a negative self talker, but I need to adjust my expectations to reality too. I am proud of you.

    • Cait Flanders May 31, 2014 at 11:10 pm

      We’re just dreamers, C. But it’s better to dream big and write out the small steps we need to take to get us there. <3

  • L May 29, 2014 at 4:17 am

    I think it sounds like you are going about the change very sensibly! You’ve got a nice balance between your emergency savings and your long term savings. I did it that way when I was saving up my Emergency Fund too…it’s frustrating because it takes longer, but there is a very real advantage to having money in the Retirement fund earning compound interest!

    I make a budget at the beginning of the year as it sounds like you do, but I make minor tweaks to mine all the time; its pretty much a work in progress. I have a spreadsheet I update at the end of each month to track my progress, so when I do that, I review my budget against my spending and see if there’s anywhere that either the budget needs adjusting or I need to watch my spending. Plus some things are seasonal – I spend much more on groceries per month in July and August because of frequent houseguests…but less on transportation, so I change the budget for those two months to reflect that. :)

    • Cait Flanders May 31, 2014 at 11:13 pm

      “There is a very real advantage to having money in the Retirement fund earning compound interest!” <- THIS exactly. And we're opposites in the summer! I spend less on food and more on gas. When the sun comes out, I have to go explore the area more... road trips!

  • Sara Hamil @ They Call it Gumption May 29, 2014 at 9:36 am

    I’m generally pretty bad for wanting to focus on one goal at a time too. But I think as I’ve gotten older I’ve become more aware of not just the need to save for retirement but also the fact that I NEED to have more money in savings. So I’ve had to force myself to give attention to both; even if it means that it’ll take a bit longer to reach a goal it’ll be worth it to know that I’m actively contributing to both.

    I think you’re on the right track, miss!

    • Cait Flanders May 31, 2014 at 11:17 pm

      Sounds like you are too!

  • Cassie May 29, 2014 at 9:38 pm

    Don’t be sad that you might not meet your 5-figure emergency fund this year. With 7 months left in the year, you never know if a side project/raise/sudden influx of money might come your way and still make your original goal a reality. I’m not saying to rely on unforeseen money per say, but don’t get down on yourself for having to adjust your goal. That’s the kind of thinking that builds the single focus drive you’re trying to move away from (I should know, I’m struggling with it too). I think your decision to allocate 10% to each goal is a great compromise from your original goal. Given that a lot of financial experts espouse 10%, the fact that you’re putting away 20% is actually still an aggressive savings rate. Anchoring? Sure, but it’s true. I hope that by giving yourself some more breathing room you feel less stressed going forward.

    • Cait Flanders May 31, 2014 at 11:19 pm

      I think we’ve talked about this, but I’m actually quite certain I’ll have $10K in my EF by the end of the year… I just don’t want to count on that, ya know? So I feel like putting aside 10% for it is a good compromise – and saving 20% overall is a good balance for my budget.

  • Beckie May 30, 2014 at 8:53 am

    I think it’s great that you are working so hard towards these goals, that is something you should be so proud of! Overall I think balance is key, without it a person can burn out or miss out on a lot of positive opportunities. I think 10% for each goal is a really great chunk.

    My personal and financial goals have changed dramatically since the 1st of the year when I set them. Mostly because I went in with only the numbers and without anticipating extra things that could come up along the way or giving myself clear direction on how I could obtain those goals. Now I have a better laid plan in place.

    • Cait Flanders May 31, 2014 at 11:20 pm

      Always nice to hear from others who have had to adjust their goals, Beckie! Thanks :)

  • Leanne June 6, 2014 at 4:31 am

    I have absolutely no savings at the moment and it makes me incredibly nervous so I totally agree you need to work towards more than one financial goal at a time. Hopefully things will look a bit better for me by the end of the year! x

  • J @ the expat investor June 16, 2014 at 9:59 pm

    I have tweaked my saving goals a bit too. I have a hard time deciding if I should save up for a down payment for a rental house or stash more into my investment account. I also decided to open a car fund and a vacation fund and just got done funding it at the moment.