“The most important thing about having goals is having one.” It seems so easy, but many times can be the most difficult step. It is quite shocking to me how so many people run around living life and going to work without being aware of what thing is that they are working for. Before you can even begin to start financially planning for your life, you need to know what it is you want to get out of life.
Going throughout life without a goal set is much like trying to navigate a ship in the middle of the ocean without a compass as every direction looks like it could be a right way and it is hard to tell if you are being led the wrong way. Having goals gives you the vision to work for. Goals also act as an accountability of your performance.With a goal set, 6all of a sudden you have something to track your progress. It allows you to look back on your performance and make changes to help you get back on course.
Your financial goals must be measurable and reviewed consistently. This is why setting specific financial goals is important, because you will be able to measure it. If your goal is to save Rs 23,00,000 in the next six years for a car you know you will need about Rs 22,000 per month so every month you can measure it and see if you are on track or need to make changes.
You should also review your financial goals on regularly, if it is a short term goal you will probably have to do a check up monthly, if it is long term, like retirement, a quarterly or semi-annual review will be enough.
Your goals should be tangible so that it would be easier to plan for their attainment. You can start it by listing out your short-term and long-term financial goals.
Short-term goals are the things you want anyway in the next 5 years like cars or funds for a wedding, etc. but always be aware that the short-term goals will give you less pliability in planning. So, if your short-term goal requires extraordinary returns on your investments, then it’s a high time to do a little planning and decide your priority. At the time if it is very much important for you to buy a car then you can shift some of the goals to fulfill it later on, or you can cut down the cost of a goal.
Now plan for long-term goals which you want to have it any how after 5 years or you can stretch it up to 10-30 years period like education for children, available emergency fund, care for family members, retirement, buying or selling business, estate planning, personal objectives such as vacations, long trips or second home etc.
Set up a plan in regards to your financial goals. You need to set up a savings or debt paying plan; this could be a monthly or bi-weekly plan. You will have to work backward to figure out how much you need to save to reach those goals, the shorter the time frame, the more accurate you can be. Base your plan on your current financial situation, do not account for raises and bonuses or any extra income in the future that you currently do not have, otherwise, you may set yourself up for disappointment if they do not come in.
And most importantly, always try to check out your plan and where you have reached to fulfill it. It will make you updated, and if you need any changes or correction, you can do as well.