Goals Based Planning
In this ferociously competitive world, we have stopped valuing small things. However, all great things today,
started small, all great habits start small, including the habit of saving. Behind all great success stories branded
as an overnight success, there is a great deal of effort, commitment, and discipline of years.
Most great assets and fortunes are made from small portion of income invested in right instrument.
Do you know you can multiply your wealth while living a comfortable life? The answer lies Goal based financial
planning.
So what is goal-based financial planning and what are the financial goals? We all aspire to achieve something
which is beyond our financial means. Few examples are – Your emergency fund, that luxurious house/Car, that
expensive new gadget, that exotic vacation, that new technology, that peaceful retirement to name a few.
How to set your financial goals –
List your Goals
List down your various Financial Goals – Emergency Fund, Car, Home, Vacation(domestic/International),
Gadget, Child’s Education, Retirement, Secondary Income
Prioritize
List down the Financial Goals according to their prioritization, i.e., which one is most important and so on
Time –
Note the time left to achieve these financial Goals and break them into – Short term, Medium Term, Long term.
Set the date
Money involved
What is the cost today?
What will be the likely inflation rate that will impact the goal?
Any expected price rise, if any, other than inflation?
Risk-taking capability
SIP has different asset class. You can choose a SIP according to various timeframe, amount, and risk
appetite.Choose an option which suits your needs; well begun is half done.
Advice
Proper financial advice will be required to get the approximate amount that will be invested over the period to
achieve the desired goal.
Final decision & motivation
If you have done the hard work till this stage, you will be able to visualize how the future would look like with a
Goal-based financial planning. You know the choices you made, you can always make adjustments as you go,
staying disciplined and focused.
The goal-based financial planning gives you the required figure to achieve that luxury. When planning for goals,
you should not forget to differentiate between your need and want.
Need – a financial condition or commitments which are so important that you cannot defer and are important
for your living. It is something you have to have.
Example – paying rent, monthly utilities, day to day expenses, paying important EMIs.
Wants – Something which can be deferred and are not so important, it something you would like to have but
doesn’t affect your day routine.
Example – Buying new gadget that is not necessary. New shoes, clothes, watches or other accessories that
can be deferred.
Everybody works so that they can enjoy their hard earned money, planning allows us to enjoy with lesser
money, in short goal-based planning makes your money work for you.