No matter what your current financial situation is right now, it is everyone's goal to retire wealthy. For that you need a plan, but here’s the thing. In order to plan for the long term, you need to plan step by step as well. For instance, if you want to have saved Rs. 1 crore by the time of your retirement, you need a plan to save more per year. And to have a plan for each and every step, you do need financial goals. So for instance you want to save Rs. 100000 in 2021, you need a plan and goal.
In this article, we are going to give you 5 steps on how to do just that.
You know the importance of financial goals and how they ultimately add you in meeting all your financial needs at every stage of your life. But deciding on the goal, first of all, can be a hassle. It can be confusing and time-consuming. For instance, you may want to buy a house and a car. Or maybe you want to start a business. It can be anything. But until you have an action plan, all those dreams are only on paper. Here’s how to bring them into reality.
You may have more than one life goal, but you need to see if these goals are tied down to your money. For example, you may want to buy a house and a car down the line, but for that you need to save a lot of money. You may also want to save to start your own business before you turn 40, but for that you need not just working capital but also capital to bail you out in tough times.
So now that you know your goal requires money, the next step for planning is to know exactly or approximately how much money your goals require. For instance, it is not hard to know how much a car or home is for, but it can be hard to determine how much you’ll need to save for your business. Besides, to work out where and how to save up for these, you’ll have to factor in inflation, interest rates, lifestyle and also your returns on investments, in addition to your ability to save. For all this, it can be a good idea to take the help of a financial advisor.
When you do have the financial goals you want to go for, you need to know approximately when you’ll be needing the funds. If the sum is large, you’ll need to save up for that. For instance, you probably need to save a lot of buying a car, but not so much for home renovation. Determine how much time you need to get the amount you need.
There are some life goals like retirement and child’s education which are non-negotiable for saving for. These are goals you can’t compromise on. But you can make choices. For instance, when it comes between saving for a car and saving for your child’s education, it’s a no-brainer. Surely, the latter is more important, right? In the end, make sure you have enough funds for these.
Finally, you need to make a budget which coincides with all your plans. Additionally, think about making investments to fuel your goals.
Remember, you may also need to monitor and revisit, and even change your plans from to time, even if minutely.