Setting Financial Goals and Budgeting

Travelling to any place would require a pre-requisite knowledge of the destination details. Likewise, when it comes to money, it is very important that one knows where exactly one wants to end up in terms of the amount of money they want to have and the reason they want to have it and to create a budget around it. To do this, one needs to set financial goals to achieve the objectives that one has set. There are basically three types of financial goals namely

·         Short term goals

·         Mid -term goals

·         Long term goals

Short term goals are those that might require from a month or two to a complete year to reach while mid- term goals, require a minimum of one to five years to achieve completion. Long term goals require five years and above for the same. Once the listing of the goals is done, a specific deadline needs to be established for each corresponding task. Accordingly, these tasks can be later integrated into the corresponding monthly budget. For example:

·         Short term goals – One can easily pay off a sum of 20000 using a credit card in say 3 to 6 months

·         Mid-term goals – One can invest in the savings for a 5 Lakh vehicle in 2 to 3 years.

·         Long term goals – Develop some savings  plan for a  1 crore corpus for retirement

Since all of us are not financially savvy, one needs to be practically knowledgeable about certain matters that we need to know and which will help us in realizing our goals. In this regard, it may be advisable to refer to major finance portals like the Economic Times, LiveMint, and Outlook Money, etc. for expert financial advice, tax breaks and various financial instruments available in the market.

ATTACH BUDGET TO YOUR GOALS

Setting up financial goals is the first step. This is practically done by everybody. However putting together a budget and then sticking to a specific budget criteria is a completely different task. Listed below are some tips which will come in handy while assigning a budget to your financing goals:

·         Make sure that you separate your high interest finance accounts from that of the low ones. Instead of leaving a lot of money idle in Savings Accounts, deploy some in  fixed or recurring deposits, if at all you want to keep a reasonable amount in the bank,

·         Minimize your expenditures and cut down wherever necessary. This does not imply that you become a miser and live a meager living to achieve these financial goals. It is just that if you minimize your extra expenses by buying what is actually needed rather than wanted, you could  save that and invest it to fetch better returns.

·         Financial goals are the key requirements for an overall financial health. The only difference that sets you apart from those rich successful people is the money management mechanism that you follow and the discipline that you exercise in following it.

While making money is important, making it last and in fact making it multiply will be a key element in ultimately determining whether you are able to achieve your financial goals or not.