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 > Financial Goals  > How To Set Financial Goals For Your Future
Setting Financial Goals For Your Future

How To Set Financial Goals For Your Future

With rising inflation, longer life expectancies, increasing education costs, and shooting healthcare needs, financial planning, and adequate investments have never been more important. This is especially true for Indians, as India lacks a robust social security system. Thus, individuals need to be self-reliant when planning for major life events like retirement, children’s education, buying a house or car, going on vacations, etc. Many people underestimate the power of starting early. The key is to begin planning and channeling savings into investments early on. It is pertinent to have financial goals for your future in mind and develop a goal-oriented plan. This plan should include diversified investments i.e. investment across asset classes. With some discipline, smart planning, and wise investments, you can make your money work hard for you and help you achieve your future needs and aspirations. This blog post dives into practical ways to set and achieve those financial goals for your future:

  • how to set different types of financial goals in India,
  • prioritize them,
  • estimate corpus required,
  • choose suitable investment products and track progress periodically.

Read on to learn how to secure your financial future in India.

Assess Your Current Finances

The first step towards planning for the future is assessing your current financial situation. Maintain an income and expense ledger and review every 2-3 months to understand your cash flows and spending patterns. This will help identify areas of wasteful expenditure that can be plugged and money can be redirected towards investments. Also, collate your current assets/liabilities, insurance policies, and tax outgo to get the full picture. As Financial Advisor in Kolkata, we believe that if you’re aware of the present scenario will enable setting practical future goals.

 

Identify Your Priorities

Once you’re financially aware, identify priorities for the future. Segregate needs from wants to focus on must-haves first. Retirement, children’s education, and funding other liabilities would typically be the top priorities for most Indians. However, some may want to buy property, save for vacations, or purchase vehicles – based on income levels and lifestyles. As Fee Only Financial Planner in Kolkata, we recommend you to rank your priorities as per timeline i.e. short-term (1-3 years), medium (4-6 years), and long-term (7 years and beyond). This will help in assigning goals for the right timeframe.

 

Define SMART Financial Goals For the Future

For clarity, define goals that are Specific, Measurable, Achievable, Relevant, and Time-bound. Quantify targets as per Indian conditions. For example, post-retirement, monthly household expenses could be ₹50,000 if living in a metro or ₹30,000 in tier 2/3 cities. A child’s 4-year engineering degree 10 years hence may cost ₹15 lakhs. A luxury sedan to upgrade after 7 years could be around ₹60 lakhs. Add buffers as per safety levels. Break down broader objectives into smaller milestones through the journey to keep motivated.

 

Estimate Corpus Required

Once SMART goals are defined, estimate the corpus required using financial calculators or simplistic formulas. For retirement, apply life expectancy post 60 years. Factor inflation towards rising costs. For kid’s education, add course fees plus hostel/living expenses. Consider returns from investments towards accruing this corpus. Assess insurance covers to offset risks. Be conservative in projections – it is better to overestimate required amounts or timelines. Keep a reasonable buffer for contingencies.

 

Devise Saving & Investment Strategy

With target corpus fixated upon, channel current income judiciously towards achieving goals over respective timeframes. Segregate funds as per timeframe i.e. short, medium, and long-term buckets. Assign savings for each bucket and invest for optimal returns coupled with liquidity. The major long-term goals would be retirement and children’s marriage – for which Equity MFs are well suited to beat inflation. Medium-term needs can be met through a mix of Debt funds, NPS, ULIPs, or endowment plans. Short-term contingency funds can be parked in liquid/overnight funds, savings accounts, and short-term Fixed Deposits.

Automate investments in Mutual Funds via SIPs to overcome a lack of discipline. Start small if the surplus is less; topped up annually upon salary hikes. Reassess risk profile every 5-7 years to balance between equities, debt, and safer avenues as the future nears. Be tax-efficient in approach for wealth creation – utilize Sec 80C, Sec 80D, home loan benefits, etc. Have unreasonable expenses under check – quit smoking, avoid eating out often, limit vacations and mammoth weddings. Compounding works magically if money is saved and invested early for long periods.

Setting Financial Goals For Your Future

Setting Financial Goals For Your Future

Review Your Financial Goal Progress Periodically

As a SEBI Registered Investment Adviser in Kolkata, I keep urging to at review investment portfolio performance vis-a-vis goals every year. Check if you are on course towards accumulating the desired corpus. If lagging, step up investments by tightening expenses. If ahead on some goals, redirect surplus to other priorities. Assess if goals need re-calibration due to changing personal circumstances – for example, having a child early would necessitate realigning education timelines and the quantum of investment needed. Market volatility is bound to happen – do not panic and stop SIPs during downturns. Stay patient and persistent.

Handy Views Of Financial Goals For Your Future

At the basic level, secure health and life adequately so that the family is protected financially upon any contingency. Purchase covers online for the best value. Avoid going overboard while taking loans. Calculate EMI commitments before tying down finances for years so that future savings ability does not get hampered. Invest surplus income early on instead of gratuitous spending on non-essential outings or shopping sprees.

Conclusion of Financial Goals For Your Future

The adage goes – when there’s a will, there’s way. As Certified Financial Planner in Kolkata, we feel that irrespective of the amount you earn currently or your age, adopting some basic financial planning principles can go a long way in determining your future financial independence. Start now, invest regularly, stay invested, increase/reshape investments as income grows, avoid debts, and don’t miss tax benefits – these simple mantras will compound wealth, in the long run, enabling the realization of some fabulous goals in the future. Here’s wishing you a money-wise journey ahead!

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