Whether it's buying a new car, house, or going on vacation we all tend to set goals. That's plural. But researchers at Toronto's Rotman School of management are challenging that mind-set, saying to achieve your target it's best to keep it simple.
The idea is working toward a single savings goal is more likely to spur people into action. Local analysts say while it sounds great, there are holes in the plan.
"If you focus on, for example, a luxury vehicle you could do that a lot faster but it could cause some of the other things you need to accomplish to be in jeopardy," Tommy Wood, a financial advisor with Edward D. Jones said.
He adds everyone needs an emergency stash. "If you don't have that, and you're saving everything toward an individual goal, the unplanned moment can wind up keeping you from achieving that goal," Wood said.
He says retirement is always a top priority for his clients, so even though you may get that new house faster, there are sacrifices.
"You could get it done, but if your mission was also to retire at age 65, doing that without ever putting money into a retirement plan could cause you to have to wait a lot longer to retire," Wood said.
Since we all want to see success when it comes to saving, advisors say whether it's one or five goals you prioritize them first so you have a clear picture of what matters.
