Financial Goal Planning

Step-2-financial-goal-planning-loanbaba

                                                                              A penny saved is a penny earned.

Enough research has been done on successful goal setting. There is sufficient evidence to prove that writing our goals leads to a higher probability of us achieving them, than ‘wishing’ we could do something. But goal planning is stressful. It requires us to assert what we want and take action towards it with conviction. A lot of the time we decide, we plan and we begin executing. In a few weeks, the stresses disappear, the goal is forgotten and the swords and shields are laid down. Why is that so? It is not because we have lost the motivation or that we do not want to achieve them any more (may be, in some cases, but not usually). It is because we see them in the ‘future’. We see our future-selves having accomplished them. Not us, right now. Right now, we have matters of consequence to deal with. These matters of consequence are nothing but petty temptations that we easily succumb to. A birthday party. A night out. Latest gadget. Another suit. The 50th pair of shoes. Branded this. Must-have that. None of these are essential. They merely satisfy us for the moment. It is not entirely our fault though. We have been conditioned to derive a sense of status by the things we own.

Keeping philosophical meanderings aside, the truth remains that we do not grow rich, nor can we save enough by spending. Planning our financial goals is one thing. Executing them is tough and requires immense will-power. Delaying gratification is the norm for achieving any type of goal. This is a matter of consequence.

Answer the questions below to know your short term and long term goals.

  1. What are your goals for this year?
  2. What do you want to accomplish in the next five years?
  3. What are your goals for the next 15 years?

So, you know what you want to achieve. Next, let us understand the value of each of your goals. Knowing the value of the goal allows us to work backwards and figure out how much we need to begin saving or investing from this moment onwards. For instance, if you wish to visit Europe in July next year, then you have exactly a year left to plan the trip and save enough for all your expenses there. Suppose you need Rs. 1.50 lakhs for a 20 days tour and another Rs. 50,000/- for shopping, then you can think how much you need to save each month. If you have taken a personal loan to book everything in advance, you still need enough time to plan your repayment, so you do not default and your credit score remains intact. Similar assessment can be done for all your investments, deposits, funds, PPF, real estate, etc.

What can be your short term financial goals?

a). Debt funds

b). Fixed maturity plans

c). Fixed deposits

d). Corporate fixed deposits

e). Recurring deposits

f). Bank’s saving account

What can be your long term financial goals?

a). Equity mutual funds

b). Real estate

c). ETFs

d). Stocks

e). Balanced funds

f). Fixed deposits

g). Index funds

h). Gold

i). PPF

A few things to keep in mind while financial planning:

  1. Have realistic goals
  2. Take inflation into account
  3. Gain complete knowledge about what you are investing in
  4. Always have contingency funds set aside
  5. Have approximate assumptions
  6. While planning a goal, be prepared for the best case scenario and worst case scenario
  7. Even if you have a financial planner assigned, be involved and understand what is happening

Get started with the charts below:

Short-Term Goals

 

Time Left

 

Value

         Monthly

Investment

Required

       One Time

Investment

Required

Debt Funds
Fixed Maturity Plans
Fixed Deposits

 

Corporate Fixed Deposits
Recurring Deposits
Bank’s Saving Account
Big Purchase
Vacation
Wedding
Emergency
Tuition

 

Long-Term Goals

 

Time Left

 

Value

         Monthly

Investment

Required

       One Time

Investment

Required

Equity Mutual Funds
Real Estate
ETFs
Stocks

 

Balanced Funds

 

Fixed Deposits
Index Funds
Gold
PPF
Miscellaneous Goals

You may also like...