5 amazing tips on setting Financial Goals
Last Updated on November 26, 2021 by Chitale CFS Pvt Ltd
Setting Financial goals based on long and short term targets is recommended by all financial experts in order to achieve financial stability.
Financial goals can be achieved by either saving or investing and can range from having a certain amount of money for retirement to paying off bills or loans early.
Setting financial goals at the early stage of life also offers various indirect financial benefits such as helping to improve your credit score or achieving early retirement.
Why financial planning is necessary?
Financial planning is the act of developing a plan for your financial future. It requires you to take an honest look at what you want your life to be like in the future and then create steps that will get you there.
The financial planning process starts by identifying financial goals and financial priorities. Financial priorities are assigned based on how difficult financial goals will be to achieve and the impact they have on an individual’s life.
Financial planning is not an easy task. It takes time, patience and effort. There are many different factors to consider when trying to plan for your financial future; how much money you make, what you want to spend it on, how long you’ve been saving for retirement or college tuition, what types of investments work best for your risk tolerance level.
This blog post will help break down the basics of setting financial goals by discussing some important pieces that need to be considered in order to have a healthy future with enough savings and passive income so that you never have worry about being able to pay the bills again.
Why is setting financial goals so crucial?
Financial goals are important for a major reason which is financial stability. Having financial goals in mind can help investors to cope up during financial setbacks.
Financial goals are good to have in order to establish financial security, establish financial control and to improve overall financial understanding.
What is financial stability?
Financial stability is the result of having a good understanding of financial matters and making suitable financial decisions which lead to financial freedom.
Financial stability can allow you to enjoy life more effectively with less worry about financial problems; it also allows add flexibility in order to establish and meet your financial goals for lifetime.
Financial stability can be achieved by:
1) Efficiently controlling your financial situations by increasing income and reducing expenses
2) Establishing realistic financial goals
3) Making early financial investment decisions to reach your goals
5 amazing tips on setting financial goals?
A financial goal is only useful if it serves a real purpose, has a deadline, has an actual amount of money needed to accomplish that goal, and if it’s more than a dream. Here are 5 killer tips on how to set your financial goals:
1) Set realistic goals:
It is important to set realistic financial goals so that you do not get discouraged along the course of your investments. So, the first step is setting realistic goals for yourself.
If you’re expecting to make Rs.1 Crore in a matter of couple of years by investing just Rs.5,000 per month, then you will end up reaching nowhere. So, it is best to set realistic goals and start with smaller goals and work your way up from there. Journey from Rs.5000 to Rs. 1 Crore can be experienced only through setting realistic financial goals and proper investment planning.
2) Set a budget:
The most important part of financial planning process is developing a budget, which can help control spending and save money. Once you have created a budget, it becomes much easier to identify where your money goes each month because all sources are accounted for.
This allows one to figure out ways they can cut back on expenses or increase their income, and ultimately make optimum investment decisions.
3) Categorize your financial goals and set priorities:
There has always been a debate about whether it is better to focus on short-term or long-term pursuits in financial planning. However, regardless of which path you choose as your primary focus, you will need to keep an eye out for opportunities where they meet in order to maximize your chances for success.
There are two types of goals that you can set for yourself. Short-term goals are often easier to achieve, but long-term goals have more potential for success.
Short-term financial targets, such as creating an emergency fund, paying off bills etc and long-term financial targets, such as saving for child education or marriage or your retirement both can be typically achieved by setting proper financial goals for each and every target.
In addition to this, you also need to set Financial priorities which are assigned based on your needs, wants and desires. Below is the matrices which can help you to set your financial priorities.
4) Identify the gap:
A financial gap refers to the difference between how much money someone has and what they need or want. For instance, if you have Rs. 1 lakh in your savings account and you want to buy an entry level hatchback car, then you have a financial gap of approximately Rs. 3 to 5 lakhs in this scenario.
Financial gaps are very important to identify because it’s the difference between what you have in savings and what you want or need, which will help investors to determine how to reach a particular financial goal and that too by beating inflation.
5) Have a deadline:
It is not always easy to have financial goals in mind, but setting a target date to achieve financial goals can help you to understand how much time do you have to achieve those goals. Such deadlines also motivate you to work harder towards your financial plans.
To summarize, it really does not matter what you are trying to accomplish in life, financial freedom is always the mother of all goals.
The good news is that setting financial goals can be done at any age or stage in life. Create a list of all the things you want to achieve with money. Share the list with us if possible so we can help you achieve those goals at the earliest!
Creating a list of financial goals is an important step in achieving your ultimate goal for financial freedom. Without them, you’ll never know where to begin or what steps to take next on the journey towards living a worry-free life.
All it takes is some planning and organization from both yourself and our team at Chitale CFS. We will work with you one-on-one every step of the way and help to create a plan that’s tailored specifically for your needs so that you can finally live without any worries about money ever again. Create your own personal list and start setting financial goals today!