Setting Up Clear Financial Goals Always, keep you on Track in Your Financial Journey.
Almost every investor has the primary question in their mind is which option will give them the superior returns on their invested value? Literally, would that be the right thinking or question to have? So lets learn best ways to set your financial goals.
The basic tenets of private finance advise individuals to start out with introspection and their own thinking. One should start with one’s financial goals rather than trying to find only high paying or returns investments.
The financial goals clearly define what you plan to realize and you’ll accordingly plan your journey—where to take a position. What proportion to take a position and set your expectations right.
Clearly defined financial goals or smart financial goals assist you make a sound budget and ensure better execution of an equivalent to realize your goals. Here is a list of best ways to set your Financial Goals & they will show you, how you’ll frame a sensible financial your goals:
They should be Specific:
The financial goal must be clear within the minds of the individual. Buying a home is a really vague goal, for instance. However, if one says arranging deposit for a 1 bedroom hall kitchen (1BHK) range in a gated community in Mumbai Suburbs. Then it makes more sense. Specific goals make sure that there’s an emotional connection with the financial goals and such goals are more likely to be achieved.
They should be very Measurable:
The goal should have a money value ascribed thereto , among other factors. It always help the individual to know where he wants to travel clearly. Going by the instance mentioned above, one would say that he would find yourself buying a home priced at Rs 70 lakh. The deposit at 20 percent works out to be Rs 14 lakh.
The money value allows you to adjust your goals counting on the extent of cash you saved and therefore the changes within the price of the financial goals. For instance, you’ll have a target of raising Rs 14 lakh but the costs go above your expectations, then an equivalent got to be factored into your budget .
They should be Achievable:
The financial goal must be achievable. Sometimes the goals aren’t achievable during a near future. However one might want to use time on his side to form goals achievable. Goals that look not achievable for people with a really low-risk profile, may become achievable if some allocation is formed to risky assets offering high returns.
Just for an example, in an above mentioned example, for a private with a monthly salary of Rs 1 lakh and monthly saving of Rs 30,000. The goal appears to be impossible if one wants to boost the specified amount of cash by end of the fiscal year. However, if the person takes a touch long run , then his goal becomes achievable.
If you’ve got to accumulate a corpus of Rs 14 lakh at the top of 5 years from now and therefore the expected rate of return is 12 percent once a year , then you ought to be investing approximately Rs 17,150 per month. These numbers make it achievable within the given context mentioned above.
They should be Realistic:
The financial goal must be realistic. If a private with a monthly salary of Rs 1 lakh decides to create a multi-storied mansion within the plush localities in South Mumbai. Then it might look impossible within the given context of high property prices and inadequate income. just some miracle can help in such circumstances.
Even if you stick with your goal of shopping for 1BHK, but attempt to achieve it during a short span of your time along side other goals like happening a far off vacation and arranging deposit for a luxury sports utility vehicle, then it’ll become unrealistic.
They should be Time Aligned:
The financial goal must be expressed within the context of the time. Each financial goal comes with a tag . But inflation ensures that the worth tag changes with the time involved. for instance, within the above example if we assume inflation at 5 percent. Then an equivalent house are going to be available at Rs 89.34 lakh five years from now and at Rs 98.5 lakh at the top of the seventh year.
If we’ve to write down the above mentioned goal in SMART words then it might read: Arranging deposit of Rs 19.7 lakh for a 1BHK range in a gated community in Mumbai Suburbs priced at Rs 98.5 lakh seven years from now.
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Hence, Clearly defining your financial goal makes it easy to draw a budget . A saving and investment action are often prescribed with more clarity if the individual knows what he wants in his or her future. if you follow these best ways to set your financial goals, they will help you to create your enough corpus when you need it.