These days, having financial goals is more important; especially when most of us are experiencing financial difficulties. Take note that financial goals you are setting are meant to be achieved, and not to be left as mere dreams. It is important that you give yourself time to sit down and write it down. Try to ask yourself how much money you would like to have after a certain period of time to achieve particular financial goal. One thing that you will need to be sure that you are really serious about achieving a certain financial goals. It is also important that you consult your spouse while finalsing your goals. If you start investing after goal setting it will give you far better result as it will help you in deciding the exact asset class in which you should invest.
Steps for Setting Financial Goals
1) Identify and list down the financial goals:
The most important goals and dreams are:
- Buying a Dream House
- Home Renovation
- Providing for Children’s Education
- Providing for Children’s Marriage
- Dream Vacation / Tour abroad
- Buying Vehicle
- Buying Holiday Home/ Farm House
- Comfortable Retirement
- Corpus for Starting New Business
- Gifting and Charity
2) Categorize the Goals:
Break each financial goal down into, short-term (less than 3 year), medium-term (3 to 5 years) and long-term (5 years or more) goals, which will make this process easier.
3) Prioritize the Goals:
Break each financial goal down into High, Medium and Low Priority; which will help you to decide which is more important and which can be delayed for future. We need to prioritize our financial goals as our needs are multiple but our resources are limited.
4) Use SMART:
A useful way of making goals more powerful is to use the SMART.
S - Specific: Your Goal should be specific, clear and simple to understand. Instead of setting a goal to buy a house, set a specific goal to buy 1 BHK at Mumbai in for 50 lakhs in present terms in 3 years.
M - Measurable: Goal you set should be measurable. If it is not measurable, than it is not manageable. When you measure your goal, you stay on track.
A - Attainable: Goal should also be attainable. It should not be far from reach or impossible.
R - Realistic: Your Goal can be realistic only if you truly believe that it can be achieved. Setting unrealistic goals disturbs the entire financial planning.
T - Time-bound: Your goal must be completed in certain time frame. A Goal without any time frame is of no importance.
Goal setting can be effectively done by proper financial planning process. In order to live a happy and joyful life, you need to have specific and stated goals so that you can plan accordingly and also achieve the same in time. It is also advisable to prepare a financial plan at earliest. It's never too late to develop a plan. However, the earlier you start to plan, the better for you and your family. Early planning can ensure you to save more money, invest early in right Avenue, improve your quality of life and also give you financial freedom when you retire. Goal setting is a major component of financial planning without which you cannot start your financial journey.
Pankaaj Maalde is a CFPCM , Head – Financial Planning at Apna Paisa. He can be reached at firstname.lastname@example.org
The author is a Certified Financial Planner by profession. He currently works as Head - Financial Planning at www.apnapaisa.com and makes Comprehensive Financial Plans for Clients. He is IRDA and AMFI Certified and has over 11 years of experience in the field of Financial Services with special expertise in Life Insurance and Mutual Fund products.
The author can be contacted at email@example.com.
Disclaimer: The author has taken due care and caution to compile and analyse the data. The opinions expressed above are only the views of the author, and not a recommendation to buy or sell. The author does not accept any liability whatsoever arising from the use of any of the above contents.
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