Think about all that you want and why. Now assess where you are, to determine what you need to do to achieve your goals.
At some point or the other we have learnt about the importance of saving money and that it is a good habit. But unless you know what you are saving for, your savings will have no clear meaning, it is somewhat like owning a bike and not knowing how to ride it. Taking control of your financial life requires planning, and that starts with setting goals.
Having a broad idea of what you want from your money is a start, but financial goals need to be more specific. For instance, instead of listing car purchase in your wish list, you should mention buying a car two years later costing 5 lakh. Having clear financial goals give you something to work towards and help you to stay motivated.
The journey to any financial goal starts by assessing your income, expenses and net worth to know where you stand. The next step is to bucket your financial goals into timeframes and priorities. For instance, most of us need an emergency fund, need to reduce debt and plan for retirement; of which retiring debt should be a priority. Then there are some goals that are non-negotiable, like child’s education. While you can postpone your vacation, you cannot change the year your child will enter college.
To reach your financial goals, write them down, making them specific, measurable, action-oriented, realistic and with clear timelines. An important aspect to consider when setting financial goals is to adjust them for inflation, this way you will avoid any surprises as you near your goal, when you actually need the money.
You may have multiple financial goals to work on and one way to deploy money, is to have different investment portfolios for each goal. You can do so with a mix of mutual funds for each goal, depending on your risk profile and suitability of the fund. For instance you can invest in equity funds for long-term goals, hybrid funds for medium-term goals and debt funds for short term goals.
Once you start investing, make sure to check its progress so that you stay on track. There are several online tools available to track your investments. An annual review is good for long-term goals, while a more periodic update may be needed for short- and medium-term goals. Finally, to make your plan work, automate your investments through your savings account, lest you spend it on something else. Setting financial goals helps you to stay motivated, track the progress of your investments and maximize your chances of achieving the goals.
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The material prepared is for investor education purpose and for general information only. The material is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinion provided herein is based on the various parameters/inputs and there is no assurance or guarantee that the investment goals will be achieved. Investors are advised to refer the Scheme Information of the respective Scheme and consult their financial, legal and tax advisers for planning of goals as well as before taking any decision of investment.
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