Everyone has a lot of dreams. While some people may have the hope of going on a world tour before 35, others may dream about establishing their business. Hence, the dreams and goals vary from one person to other. As a result, financial needs will be different. So, to fulfil the different financial goals, various approaches will be required for different individuals.
Irrespective of your dream, financial planning is beneficial for the future.
The first process of figuring out your financial goals is deciding what you want. A very frequent question asked in interviews, “Where do you see yourself in 5 years” is beneficial to understand the concept of financial goals. This question is used primarily to realise your ambition, the amount of hard work you will be willing to go through to reach that goal and how the goal that you are setting up will be in line with the life goals you have set up.
We all have many goals and planning for various goals may be confusing. Hence, it’s important to understand how to prioritise your life goals which will help you figure out what to focus on first. Before prioritising your financial goals, it is better to get few other things sorted. Looking at reducing your debt, creating an emergency fund are some of the ways that will make sure that you reach your goals on time.
All goals must be time-bound. Therefore, decide what you can achieve immediately and what can be achieved over time. In every case, how much you save each month will depend on how quickly you’ll need the money.
Goals can have different time horizons such as 1 month, 3 months, 1 year or up to 15 years. It depends on your goals. Hence, goals can be segregated between short term goals and long term goals. Sort out what’s within your reach, what will take a bit of time, and which must be part of the long-term strategy.
After you have made a list of goals, estimate the damages that you will need to incur. Suppose you want to open up a business of a catering service. Decide what kind of equipment you will require and make an estimate of the total expenses you will need to incur.
Think of all the ways you can reach that goal. Include savings, cutting expenses, earning extra money, or finding additional resources. Decide which combination is the most suitable combination to reach your goal and write them down.
Saving and investing can help you in achieving your financial goals. Equity investments like equity mutual funds can take care of the long term financial goals while the debt instruments like debt mutual funds, recurring account and fixed deposits will help in saving for short term goals.
All of this might sound intimidating at first, but setting your financial goals help. Prioritise, then achieve. After accomplishing some of the relatively easier goals, you gain confidence in your decision making. Once you can fulfill your short term goals, you will be motivated to achieve your long term goals.
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