Starting fertility treatments? Mapping out a once-in-a-lifetime vacation once you’re vaccinated? Leaving your relationship? Renovating your home? Eloping?
If a big life moment is in play for you, here’s how to prepare for it financially.
Take stock of your current savings
According to recent data, Canadians are sitting on over $ 90 billion in traditional savings accounts. That’s a lot of money! If you used the pandemic as an opportunity to amplify your savings efforts, it’s time to tally it all up.
And if you’re bit late to the savings party, don’t worry. It looks like we’re all going to be laying low for a while yet, which means you can trim back on all non-essential spending, and bank those savings. If you’re looking for a benchmark to aim for, the average household was able to shave between 10 and 15 per cent from their total spending throughout the pandemic. Estimate how much your savings will total in about four to six months, once the economy opens up again.
What’s your big life moment going to cost in 2021?
This exercise starts with a cup of hot peppermint cocoa and your sweatpants. Sit down to make a list of what you want to do or accomplish. Next, start researching the total expense.
If you’re ready to begin IVF treatments, calculate the portion you will pay versus what your benefits cover (yes, you’ll need to email or call your benefit provider). If you’re so over your unhealthy relationship and are ready to file for divorce, quote out the entire process with an arbitrator or lawyer. (Make sure you speak to a few because the prices will range widely.)
If a vacation is what you want, tally up the cost of flights, passport renewals, hotels, the gear you’ll need and more. Maybe use up those travel points you’ve been sitting on. If the pandemic showed you that your home is in desperate need of a renovation now that you’re working and living in the same space 24/7, and for what looks like another full year, get a few contractor quotes.
And if you’re ready to tie the knot hush-hush style, research pop-up weddings, elopement services and don’t forget the cost of rings (if you’re even doing these) and outfits. If you have dreamed of going back to school to retrain as a digital marketing specialist, research the costs of tuition and books from accredited schools.
Now, compare the costs against what you’ve accumulated in savings
Do your pandemic savings total up enough to cover the costs of your 2021 big life moment and, ideally, still leave you a healthy emergency cushion? If the answer is yes, that’s great news. You can get to work actioning your vision.
If not, don’t be disheartened. It just means you’ll need to save more. Simply apply the great savings habits you’ve adopted during the pandemic for a little while longer, like trimming back on takeout and automating your contributions into your savings account on payday. And if you really want to speed up the process, use your spare time over the holidays to purge and sell what you don’t need, or sell that second car you barely use, to raise more money for your goal. Continuing to save until you’ve reached the total cost of your big life moment will keep you out of debt, which feels awesome and is super smart given that there’s still economic uncertainty for the New Year.
After a wild year like 2020, it will be emotionally healthy to spend some money on what matters most to you in 2021. The key is to ensure you’ve got the savings to make it happen.