We often discuss and discuss our life goals, but somehow we don’t put in enough effort to align our finances with our goals. Having a financial plan is essential to support our life goals.
In this article, we will explore how we can break down our life goals and figure out how a financial plan will help to achieve our goals.
What is your goal, and is money involved in it?
Usually, when we decide on a goal, we think about the final output. But if you observe, the journey is what is more important and the deciding factor. So if your goal needs money to fuel it, you have to identify that and map it out clearly.
An example: Suppose you want to be a professional musician. This goal will require time and money; you have to pay for your music lessons and instruments. If someone is sponsoring you to achieve your goal, there is nothing like it. But if you have to be the financer, in that case, it is important to plan your finances.
How much money is required?
Once you have decoded the financial requisites to support your goal, the next big question is, how much money do you need?
The kind of money required to support any life goal can be divided into two parts: long-term or short-term goals. A long-term goal can be like planning for retirement or buying your dream house. These goals will require a long-term investment to generate the corpus.
A foreign trip or your child’s marriage can be defined as a short-term goal, where you need the money immediately to pay for the event.
So, knowing the kind of corpus you need to fund your life goals is crucial.
How much can you save?
Once you know how much you require, the next step is to decide how soon you can start saving. If your goal is a long-term one, you should start to save small chunks of money every month. If your goal requires immediate funding, you may look for credit and pay back on a monthly EMI basis.
For starters, you can open a zero balance account online. It is one of the easiest ways to open a digital savings account right away without paying any account maintenance fees.
Investing is another option. Depending on your requirements, you can choose to invest in fixed or recurring deposits or mutual funds.
FDs and RDs are safe investment tools where you invest a lump sum or a small amount for a fixed tenure. In the case of mutual funds, your money is invested in shares and market instruments. The returns are market-dependent and involve risk.
Finally
Stick to whatever you have on your mind, and don’t get distracted from your path. A good way is to regularly review your savings and expenses to check if you are on track. Click here to learn more about where to put your money and how to maximize it.
