Financial goals are the major fundamentals of financial freedom. It is achievable if goals are S.M.A.R.T. I can say that nothing astounding will happen to you unless you gather the necessary courage and have strong conviction to accomplish your goals. Your aspirations are achievable only through financial goals. Determine your financial goals by considering your life cycle stages. It begins from infancy to till you die. First dependency stage (student life) is till you join your profession or job or business. Second dependency means your post-retirement period till you die. You can experience unique experiences in different stages. Each stage is very significant and unique. Working span (earning phase) is more significant and unique. You have boundless commitments and responsibilities towards your potential dependent/s. Additionally, you have to accumulate your retirement kitty.
In the Indian context, usually you join in your profession or job or business ideally at the age of 25 – 28. At 29 – 32 you marry and may be after 2 – 3 years you extend your family. You may take house loan and/or car loan. Moreover you bear educational expenses for children, i.e. for schooling, graduation & post-graduation. You will have have household expenses, lifestyle expenses, dependent expenses, insurance premium & EMIs towards loan. At last if you have some surplus, you save for your retirement. Provision for retirement is most important but often it is neglected. Your working span may be only for 25 – 30 years. Then comes retirement which is starting for a new life.These years (earning phase) are called golden period of life. If you make any mistake, it’ll be too costly for you. You may hardly get time and scope to offset. You must consider your realistic concerns and prioritize your needs for different life cycle stages.
‘A goal properly set is halfway reached.’ Lydia Sweatt
Set your S.M.A.R.T financial goals
- Realistic &
- Time bound.
Needs Vs Expectations
Be quiet to listen your inner mind to set your goals. You may have too many expectation lists of yours as well as of others. Managing expectations play a vital role during earning phase. Otherwise you’ll be disappointed. You may be rejected by others while you don’t fulfill other’s expectations at your cost. There is no limit of expectations. You have to say ‘NO’ to yourself or others while you rationally consider the difference between needs and expectations.
Expectation is a strong belief that something will happen and a need is something that is necessity to live a healthy life.
Aspirations Vs Financial Goals
Aspiration is a strong desire to achieve something. Aspiration is emotion based inner experience rather than fact i.e. unmeasurable and intangible. But financial goals are measurable, unemotional (rational) and realistic. Aspirations are just your imaginary feelings. As soon as you set your goals, you give a real shape to achieve it. Therefore, aspirations are unlike goals, but aspirations are much needed to set your goals.
Your Financial Goals
Major Goals (based on financial plan)
- Children’s Future (i.e. education, marriage & kids startups),
- House Purchase,
- Vacations &
- Loan pre-closure, specially bad loans etc.
Other Goals (based on financial plan)
- Financial Well-being,
- Own study,
- Change of job or quitting job and start own business,
- Windfall &
- Death or disablement due to accident or illness etc.
Setting short-term, medium term, long term & distant financial goals are fundamental issues while you set goals
Financial goals are driven by specific future needs. You have to prioritize your action plans. Categorize your action plans as Now, Soon & Later as per priority.
Now means you need immediate step to achieve your financial goals.
Soon means you need to do soon but not as urgent as Now.
Later means which are least important and you can postpone.
When you don’t have financial goals, you may decide to do something randomly without categorization of “Now”, “Soon” and “Later”. Ultimately you become tired and hopeless. You don’t have defined goals. Your goals are not S.M.A.R.T. Without goals you are like a child tottering in a toy shop. You grab a toy and let it go by snatching another toy. Have you ever experienced in case of hurdles/obstacles you gave up and moved on to easy tasks which were non-essential goals? While you have objective/s in your life, you must have goals. Persistently stick to them till you achieve your defined goals within predefined time horizon. You may have to alter your strategies based on personal and macroeconomic factors. To achieve goals, you must have right direction and without goals, you are directionless. You have to understand the power of your subconscious mind. Your subconscious mind works when your goals are S.M.A.R.T.
Going one step further, you identify your own sensory receivers. Accordingly, communicate your goals through subjective aids like visual (images), auditory (spoken words)or kinesthetic (touches).
You need proper communication with yourself while setting Financial Goals
- Write down your list of goals,
- Quantify the amount of each goal,
- Define the time horizon of each goal, i.e. set mm/dd/yy for each goal,
- Mention the details of goals and write descriptions by using present tense,
- Prioritize your goals,
- Read your goals every day with conviction while you’re in fresh mind,
- Visualize your goals clearly and transparently. Think emotionally about your goals. You have to develop your sense that either you can touch, you can see, smell or hear,
- Note down auto suggestions (self induced suggestions) as you’re obsessed to achieve your goals. You may think these are illogical. But to me these are essential. You can only recognize the power of subconscious mind and auto suggestions while you achieve your goals by tracing your past steps &
- Try to understand your body language/sensory receivers for proper communications. You may either be visual, auditory or kinesthetic. You have to visualize your goals according to your body language/sensory receivers.
These are sensory receivers for your learning or pursuing styles. Use your own style effectively. You can see the difference while you implement.
The magic of financial planning is you can review and update your goals and monitor the progress which depends on your risk profile, investment time horizon and investment amount till you achieve your financial goals as you have predefined time horizon and goal amount. Your financial well-being depends on your goals which are written in your financial plan. You can’t score in a basketball game without opponent’s basket. Financial goals are like basket. You need to target it. Hire a professional for proper guidance.