HOW TO ACHIEVE YOUR FINANCIAL GOALS
We all have dreams, we all want to become wealthy, we all wish for a big house, good lifestyle, blah, blah, blah!!!
But how many of us actually plan for it – financially?
If I ask you, what will be your financial circumstances down the line five years? Probably, you might say,“I will be financially stronger”. Isn’t it?
If I ask you where you will be financially 10 years from now? Probably, your reply will be “I will be financially better from today”.
If I ask you where you will be financially 20 years from now? Probably, you would be clueless, isn’t it?
Determining your financial circumstance five years down the line, 10 years, 15 years, 20 years down the line is the financial secret of surging ahead from your current financial stand to where you want to be in future.
To change your financial situation for better, you need to be clear. Your answers should be very specific and precise. If you are not clear and clueless where you want to go exactly, you won’t be able to focus. You will get easily distracted. Distraction will restrict your growth.
Hence, it is very important for you to set your financial goals. Financial goals that are more Specific, Measurable, Achievable, Realistic and Time-bound.
Here’s a step-by-step guide to set SMART FINANCIAL GOALS –
#1 Write Your Financial Goals
Before you begin your journey of investment it’s very important to write all your financial goals, your purpose of investment on a piece of paper. Be it small or big, long-term or short-term, it’s important to make a note of it – be it buying a house or buying a car, be it buying the latest iPhone, be it funding an international vacation trip, be it children’s education or their marriage, be it your confident retirement. You need to put it down on the piece of paper.
By doing so, you will realize whether the financial goal is achievable, practical, tangible, realistic, or not. Writing your financial goal is important.
When you put your financial ideas on a paper, your financial thoughts transforms into words, you express it to yourself and to nature, an amazing transformation begins to happen. Your financial thoughts have now taken on body, shape, form, substance. It no longer is just a thought. It becomes a target that you aim to achieve.
Your financial dream transforms into a goal the very moment you write it down. You get more precise and clear on it. For instance, your goal is your child’s grand marriage. When you write it down, you define when, where, how, guest list, etc. you start thinking over it and planning it.
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#2 Prioritize Your Financial Goals
Once you write your financial goals, the next step is to categorize them based on its priority. Financial goals less than two years are generally short-term financial goals. The financial goals you aim to achieve in the next 3 to 5 years are mid-term financial goals. The financial goals that you aim to achieve5 years and beyond are generally categorized as long-term goals.
By categorizing and prioritizing your financial goals, you will be able to create a roadmap and to select the right investment products to achieve your financial goals.
Prioritizing your financial goals helps you to create a better and realistic financial plan. It helps you in determining how much money you need to accumulate at different stages of life.
#3 Set Time Horizon For Your Financial Goals
Now that you are done with determining your financial goals and its priority, the next step is to determine the time horizon for each financial goal. This will help you to be financially prepared and the financial goals.
Fixing a target date also psychologically influence your thought process to work on your financial goals.
#4 Estimate the cost of Your Financial Goals
It is very important to estimate the cost of your financial goals including the inflation rate. If you are planning to save for your child’s higher education, which is expected to take place after 15 years, first you need to calculate the cost of the higher education today. Then you need to calculate the inflation ratio of 15 years to get the future value of your financial goal.
#5 Determine How Much You Need To Invest
Once you have calculated the future cost of the financial goal, you can easily decide on how much you need to save and invest to accomplish your targeted future financial goal. If you have time by your side, invest in higher risk investment assets.
Have A Goal? Calculate How Much You Need To Invest For Your Financial Goal Right Away!
#6 Do The Budgeting
As you know by now exactly how much to invest towards each and every goal, you need to accommodate these investments in your budget. If you do this year after year, then you can transform your financial goals into reality.
Start setting your financial goals; accomplish it with Money Multiplier.
Deepak Dhabalia
Wealth Coach
