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How to set financial goals



‘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. 

SPECIFIC

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 clearer picture.

MEASURABLE

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 well.

Making your goal measurable makes it easier to track and achieve.

ACHIEVABLE      

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.

RELEVANT

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. 

TIMELY

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 



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