‘If you do not know where you are going,
any road will get you there.’
These are the wise words of Cheshire cat,
and we cannot tell you how accurate this is when it comes to financial
management. If you have no goals in your financial life, you will be randomly
investing and using the money as and when it comes. It can so happen that you
might not be prepared for an important goal that’s nearby because you failed to
see it and plan for it in advance.
Knowing where you want to go, is the first
step when it comes to setting financial goals.
Try to set S.M.A.R.T goals. Your goals should be Specific, Measurable, Achievable, Relevant, and Trackable.
Stay away from generalised statements in
your goal. Instead of saying that ‘You want to buy a house’ say that ‘You want
to buy a 3 BHK apartment in Chennai costing around fourty lakhs in the next five
years.’ This gives you a clearer goal to look at and will also help you get a
Quantify your goals. As we have discussed
in the point above, it is important that you set goals which are measurable in
terms of the money or time. Stay as far away as possible from the rough
picture. If you can’t figure out how much money you’d need to attain a
particular, chances are that you won’t be able to save for the said goal as
Making your goal measurable makes it easier
to track and achieve.
Know your current financial status and your
lifestyle. Design your goals in such a way that you are able to achieve your
goals, even under your current situation. One of the major issues that most
people face with financial goals is that they set very unrealistic goals.
Setting a lot of unrealistic goals, will
only end up demotivating you.
The financial goals that you have in your
life, should match your aspirations and your dreams. It is essential to
establish that connection so that you stay motivated. When your dreams and your goals suffer a mismatch, there are high chances that it would become tough to
sustain the enthusiasm and energy, because that’s not what you really wish to
and even if you someday achieve that goal which you planned, it would make no sense
whatsoever because it’s not aligned with your life objectives.
Setting a time line is very important
because you need to know how much it takes to achieve that goal. You will need
to know how much you need to save each month, so that you can achieve your goal
on time. Setting a time limit to your goal will help you stay disciplined and
within your budget.
Thus, financial planning is all about
setting goals, and managing your wealth in such a way that you reach those
goals in time. Planning for a goal gives you direction and you will be able to
look ahead in your financial life from that direction.
POSTED BY: BALAKARTHIGA.M