<p>Setting well-defined financial goals is the cornerstone of successful financial planning. Goals can help you take control of your life and feel more confident of your finances. They give direction to your savings and set a plan to provide funds at important turning points in your life. Your goals become the route markers in your journey of life.</p>.<p><strong>Financial objectives</strong></p>.<p>Financial goals are the personal, big-picture objectives you set for yourself to decide how you will save and spend your money. It can be any plan you have for your money. Having specific financial goals means you are committing yourself to achieving what you want out of life by planning to save and spend money for those specific things. It helps shape your future by influencing the actions you take today.</p>.<p>For example, say your goal is to pay off your housing loan as early as possible. Then, you will probably spend less on movies today. If you did not have such a goal in place you would be spending aimlessly and your housing loan would continue to be a huge burden on you.</p>.<p>Clearly defined goals can curb unnecessary expenditure and help fund what you feel is very important in your life.</p>.<p><strong>Define financial goals</strong></p>.<p>Goals can be of various types. It can be long-term, short-term or medium-term, based on time. Planning for retirement is a long-term goal if you are in your 30s. If you are planning to buy a house in five years’ time it is a medium-term goal and if you want to buy a car in eight months, it is a short-term goal.</p>.<p>The stage of life you are in determines what type a goal is. As a college student you may be just interested in saving up for a new smart phone in the next few months. But as a married, middle-aged person with children, your goals have to be a mix of long-term and medium-term ones. You will have to plan for college education, your retirement and probably a house if you do not own one.</p>.<p>It is important to classify your goals in time buckets as it helps determine how much time you have to invest for a specific goal. You can build a large corpus for a long-term goal like retirement slowly and steadily if you start early. Compound interest earned on long-term investments can reduce your outlay for these goals.</p>.<p><strong>Setting financial goals</strong></p>.<p>Goal-setting is a crucial and difficult process of financial planning. It requires time, intention and self-awareness. Most skip the process of setting goals and take the easy way out - save arbitrarily. Later, they wonder why they failed to achieve some targets.</p>.<p>Many factors can influence the way you set your financial goals, including your motivations, values and dreams for the future. Family influences like the way your parents invested and saved have a major impact on how you do it now. This makes a goal-setting process very unique to you.</p>.<p>So, take your time to set goals. Think big and long term. Do you want a car or a house? Do you want to retire early or work longer? Do you plan to have children? Is your income sufficient to support your goals or do you have to change your job to earn more to fund your goals? Once you have your broad goals ready you can make them SMART (specific, measurable, achievable, relevant, time-bound) by breaking them to smaller, actionable steps.</p>.<p><strong>SMART goals</strong></p>.<p>This process involves deciding on what goals you intend to have, estimating how much money and resources you will need, and planning how long you expect it will take to achieve those goals.</p>.<p>For example, ‘I dream of buying a large house’. This statement is just a wish without a plan. To convert it into a financial goal, you need more inputs. What is the size of the house you want to buy in the future? When or which year you want to acquire it? How much it will cost now? How much will it cost accounting for inflation in the year you want to buy it? So, if you estimate you want to buy it in the year 2030, and a 5,000 sqft house costs Rs 2 crores as of today, it becomes a SMART goal as it is specific (size of house), measurable (cost in today’s terms), achievable (within your budget and you can save up for it in the next seven years), relevant (it is for your residence) and time-bound (by the year 2030).</p>.<p>If all this seems daunting to you, you can use available technology to speed up the process. You can use Apps that convert goals to SMART ones.</p>.<p>Once you have set your goals, review them to check which ones fit into your budget and prioritise them in the order of importance. This will help you focus and direct your money to important goals. So, go ahead and set your goals. You can turn your dreams into reality.</p>
<p>Setting well-defined financial goals is the cornerstone of successful financial planning. Goals can help you take control of your life and feel more confident of your finances. They give direction to your savings and set a plan to provide funds at important turning points in your life. Your goals become the route markers in your journey of life.</p>.<p><strong>Financial objectives</strong></p>.<p>Financial goals are the personal, big-picture objectives you set for yourself to decide how you will save and spend your money. It can be any plan you have for your money. Having specific financial goals means you are committing yourself to achieving what you want out of life by planning to save and spend money for those specific things. It helps shape your future by influencing the actions you take today.</p>.<p>For example, say your goal is to pay off your housing loan as early as possible. Then, you will probably spend less on movies today. If you did not have such a goal in place you would be spending aimlessly and your housing loan would continue to be a huge burden on you.</p>.<p>Clearly defined goals can curb unnecessary expenditure and help fund what you feel is very important in your life.</p>.<p><strong>Define financial goals</strong></p>.<p>Goals can be of various types. It can be long-term, short-term or medium-term, based on time. Planning for retirement is a long-term goal if you are in your 30s. If you are planning to buy a house in five years’ time it is a medium-term goal and if you want to buy a car in eight months, it is a short-term goal.</p>.<p>The stage of life you are in determines what type a goal is. As a college student you may be just interested in saving up for a new smart phone in the next few months. But as a married, middle-aged person with children, your goals have to be a mix of long-term and medium-term ones. You will have to plan for college education, your retirement and probably a house if you do not own one.</p>.<p>It is important to classify your goals in time buckets as it helps determine how much time you have to invest for a specific goal. You can build a large corpus for a long-term goal like retirement slowly and steadily if you start early. Compound interest earned on long-term investments can reduce your outlay for these goals.</p>.<p><strong>Setting financial goals</strong></p>.<p>Goal-setting is a crucial and difficult process of financial planning. It requires time, intention and self-awareness. Most skip the process of setting goals and take the easy way out - save arbitrarily. Later, they wonder why they failed to achieve some targets.</p>.<p>Many factors can influence the way you set your financial goals, including your motivations, values and dreams for the future. Family influences like the way your parents invested and saved have a major impact on how you do it now. This makes a goal-setting process very unique to you.</p>.<p>So, take your time to set goals. Think big and long term. Do you want a car or a house? Do you want to retire early or work longer? Do you plan to have children? Is your income sufficient to support your goals or do you have to change your job to earn more to fund your goals? Once you have your broad goals ready you can make them SMART (specific, measurable, achievable, relevant, time-bound) by breaking them to smaller, actionable steps.</p>.<p><strong>SMART goals</strong></p>.<p>This process involves deciding on what goals you intend to have, estimating how much money and resources you will need, and planning how long you expect it will take to achieve those goals.</p>.<p>For example, ‘I dream of buying a large house’. This statement is just a wish without a plan. To convert it into a financial goal, you need more inputs. What is the size of the house you want to buy in the future? When or which year you want to acquire it? How much it will cost now? How much will it cost accounting for inflation in the year you want to buy it? So, if you estimate you want to buy it in the year 2030, and a 5,000 sqft house costs Rs 2 crores as of today, it becomes a SMART goal as it is specific (size of house), measurable (cost in today’s terms), achievable (within your budget and you can save up for it in the next seven years), relevant (it is for your residence) and time-bound (by the year 2030).</p>.<p>If all this seems daunting to you, you can use available technology to speed up the process. You can use Apps that convert goals to SMART ones.</p>.<p>Once you have set your goals, review them to check which ones fit into your budget and prioritise them in the order of importance. This will help you focus and direct your money to important goals. So, go ahead and set your goals. You can turn your dreams into reality.</p>
