When we say financial goals, we simply mean the financial targets we want to achieve and how we will save money to meet those targets. These goals can be short-term or long-term. By short-term goals, we mean the goals that can be achieved in the near future. These are your goals on which you will spend money within a few days or a few months or a few years. Examples of short-term goals are paying rent, traveling, buying a bike within six months, paying for your wedding after a year, etc.
Long-term goals have a bigger picture. These goals may take many years or even decades to achieve. These long-term goals require more attention and money. Examples of long-term goals are retirement planning, buying a house, starting your own business, etc.
Financial goals act as a reminder to you. It lets you know why you have picked up a specific financial journey. If you have no such goals, you are likely to end up with no or very little amount of savings. It can put you in endless trouble in the future. Having a proper goal lets you earn, save and invest money to meet that particular goal in the future. Suppose, you want to buy a car after one year. For that, you need to pay a down payment of 2 lakh rupees. If you have that goal in mind, you will save or invest from your earnings to reach there. This way, you can easily achieve your target. That’s how crucial setting our goals are.
This ultimate guide will let you know the importance of financial goals and how to achieve those goals soon. If you are a beginner and have very little knowledge about setting financial goals, this article will act as a guiding light towards your financial journey.
Having proper financial goals can be very crucial, as they act as our motivation to earn and save more. These financial goals act as our guiding light to show how much and where we should invest. These goals let us cut our unnecessary expenditure, and help us have a better and well-organized lifestyle. For instance, say your goal is to save for your wedding which is six months down the line. You might skip going to the pub and save for the wedding. Without setting that goal, you would continue going to the pub and end up finding yourself in financial trouble when the wedding knocks on your door.
The same thing can be applied to other aspects as well. If you are in your mid-fifties and planning to retire after a few years, retirement planning can help you a lot. You will be able to save accordingly and end up not having any financial crisis after your retirement. Similarly, if you are currently doing a job and want to start a business of your own, you need a significant amount of money for that. Keeping that goal in mind, if you start investing and saving money, you will reach your goal within time.
Financial goals can help you reach every milestone of your life. It can secure your family, and also you in emergencies where you need money suddenly. It tracks where your money is going, takes care of your savings, and gives you a stable financial life. Therefore, having some well-defined financial goals is crucial. Having such financial goals not only gives you stability in life but also gives you satisfaction when you will reach that goal successfully.
The most important thing is to realize what your goals are. If you do not know what financial goals you want to achieve, try to identify them. Almost all of us have some goals but not everyone can successfully identify them. As a result, a person often ends up in huge troubles. Identifying those goals early in life is the most important aspect for the better financial health of a family.
For example, you live in a rented house. In case you live in that house till your mid-fifties, and you only realize the importance of having an own house when you come closer to your retirement date, it will create a big issue. You may not have enough funds with you to buy a house, for instance. Moreover, even if you gather some funds on your own and rely on bank loans for the rest of the amount, paying monthly installments after retirement will be a problem. This problem would not have raised if you could identify the need for a house earlier in life. So, realizing your financial goals early is the most important thing.
If you keep track of your monetary sources and where you spend, you can easily gain control over your finance. Make the habit of creating a monthly budget and write every transaction you make. Note down how much you earn from which source, and where you are spending that money. It will not only make you organized but also prevent you from spending unnecessarily. Moreover, audit your bank statement and also track your debit card and credit card statements. This will give you a healthy lifestyle financially.
Identifying and balancing needs and wants is a crucial aspect. Needs are your basic requirements. In order to live, you must have access to those ‘needs’. Needs are the highly essential things we buy in day-to-day life. For example, food, water, shelter, etc. Whereas wants are the things or services you wish to have which increases your quality of life, or often satisfies you temporarily. For example, designer clothes, high-end smartphones, etc. Balancing needs and wants is very necessary. If you put more focus on your wants rather than needs, you may end up having very little savings which can destroy you financially. You may fail to reach your goals if you keep focusing on your wants more. Identify those wants and spend lesser on those unnecessary things. You can live a quality life even without those wants and this will help you reach your goals soon.
By telling you to shop smartly, we are asking you to be a smart customer. To turn your financial dreams into reality, you must know “how to shop smartly”. Make a shopping list for every month and stick to it as much as possible. Try not to spend and buy things other than those mentioned, if there is not an utmost necessity. Always look for sales in supermarkets where they are giving offers and huge discounts. Brands like big bazaar, reliance stores, etc give higher discounts on grocery shopping on a particular day of the week. Identify that day and if possible, try to visit that mart on that particular day to buy the stuff you need.
Debts are huge liabilities that don’t let a person grow financially. Doesn’t matter how much you earn, if you pay more than half of your earnings in paying installments, then you have an unhealthy financial lifestyle. Debts are the biggest barriers that stop you from reaching your goal. Often a person ends up falling into the vicious circle of debt trap which is disastrous for the financial and mental health of an individual. So, reduce your debts as much as possible.
When you barely have any EMI to pay, you can save a significant amount from your earnings which lets you meet your financial goals quite sooner. Always have a credit card that has a lower limit so that it stops you when you want to spend much more than your ability to actually pay on time. It is advisable to have less than two credit cards, if possible. Having more than two credit cards often makes a person spend much more than he can afford.
It is very essential to invest a significant amount of money if you want to grow financially. Having said that, you must have a clear idea of where to invest. Firstly, do your market research. Identify sources where you want to invest money and which gives you a higher return. Remember the risk associated with it as well. Often the sources which give you a higher return are having high risk. In case you don’t want to take risks, invest in funds having lower risk.
If you are a young professional and have just started earning, you must identify your goals as soon as possible and start investing. Your goals can be anything. For example, paying for your brother’s B School fees, or buying a car after one year. Once you realize a goal, start saving your money from your salary as per requirement, and start investing that money. Remember, investing is not as same as saving. Investing money in a suitable source can often give you a higher return than you expect. Whereas if you keep your money in the bank idle, you will not get a favorable return.
If you get confused regarding investments, it is best to consult a financial planner and get his advice. Consulting with a planner gives you many advantages. He can help you identify sources where you should invest as per your financial condition. He can also help you recognize your financial goals easily, using his expertise. Always save a significant percentage of your earning, if you want your money to grow and meet your financial goals soon.
Being dependent on a single source of income doesn’t always let you reach your goals early. If you have a limited amount of money and you cant invest properly, you fail to meet your goals. It is sad but true. But there are ways to deal with it. For example, nowadays, part-time online jobs are the most reliable sources of income. These jobs are highly flexible and pay you well enough to meet many of your needs.
For example, if you have a second source of income, you can use that earning to invest in a mutual fund or buy stocks. You can also pay the fees for your personal trainer at the gym. You can use that amount to pay the EMI of your car and so on. The list is endless.
Having a second source of income can do many wonders and bring much more stability to your financial life. One of the best sources to earn money online is to join as a subject matter expert at Chegg India. By joining as an SME at Chegg India, you can answer the questions of the subject of your choice, and earn a good amount at the end of the month for all the answers submitted correctly. Chegg India pays really well to the subject matter experts. In addition to this, you can opt for freelancing, if you have the potential. Freelancers nowadays earn a lot of money which makes their financial health better. Therefore, finding a second source of income is always recommended and it is considered highly necessary even by experts. So, go ahead and do your research to find a second source of income.
Always make sure that you are striking certain parameters you have set. If not, take out some time and re-evaluate what is going wrong. Consult a financial planner or an expert if you need any help. Monitoring progress helps you to know if you would be able to reach your desired goal within time or not. It helps you make decisions for the future as well. Analyze your performance well and find yourself reaching your goals soon.
Achieving your financial goals can be easy if you follow a disciplined approach. The same can be a tough job you are not financially well organized and fail to identify your goals. Each one of us has financial goals, it is just a matter of realizing those goals and working hard to achieve them. It is quite certain that you have had a fair idea of how to do that, after reading this article. Reaching these goals gives you a sense of satisfaction and makes you confident to work harder to realize and achieve more goals. This tendency can make you a healthier person financially, not everyone can be that. So, be organized and start working to reach your goals from today.