Pocket Guide to Attaining all your Financial Goals Systematically
As soon as you receive your first salary, you should start planning for your future. There are so many milestones that you need to achieve during your life. Paying for the wedding, buying a house, paying for children’s education, paying for your children’s marriage, planning for your retirement, managing unexpected contingencies, etc. are some of the major financial goals that you need to achieve during your work-life. Considering that you will retire by the age-60, you must have a well-rounded financial plan in place by now.
You will not be surprised to know that all individuals have dreams and aspiration that they want to fulfil. But, only a few set concrete goals to achieve them. When it comes to setting financial goals, there is nothing important than setting well-defined, clear, and quantifiable targets. Always remember that a goal remains only a distant dream unless it is clearly defined and is governed by a fixed timeline.
If you still have not set clear-cut financial goals for yourself, you must start now. It will be difficult for you to achieve your financial goals systematically unless you have a solid financial plan in place. In order to help you in this journey, here is your pocket guide to attaining all your financial goals systematically.
- Define your financial goals
The first step towards achieving your financial goals is to define them. Unless you have clarity about what you want in life, all your efforts might be wasted. When you are able to understand your financial goals completely, you will be in a better position to direct your efforts towards achieving them. For instance, when you set a goal of being debt-free, you must take into account all your education loans, car loans, credit card debts and other financial liabilities into consideration.
- Quantify your financial goals
The second important step in the journey towards the fulfilment of your financial goals is assigning a specific number to each goal. This will offer you clarity regarding the amount of money that you will require to fulfil that specific goal. Moreover, you will have a better understanding of the returns that your investments should generate for you to achieve the goals timely. For instance, if you are considering buying a house, you need to determine the amount which you will require as the down payment apart from planning the loan repayment.
- Set a time frame to achieve your financial goals
Thirdly, you need to assign a timeframe to each of your financial goals. Merely stating that you want to achieve your financial goals quickly will not serve the purpose as it will leave room for too much ambiguity. Firstly, you need to divide your financial goals into short-term and long-term goals. The key here lies in dividing your long-term and short-term financial goals into manageable objectives. Then, focus your investments as per the priority. These smaller objectives will help you create a roadmap to the fulfilment of each of your financial goals.
- Evaluate various investments
With a boom in the financial services sector of India, many financial institutions and insurance companies have entered the fray. Different companies offer different types of investment products. You need to evaluate different investment opportunities and categorise them according to their risk-return profile. Now, you need to match them with your risk appetite and select the ones which meet your requirements. Some of the popular investment opportunities at present are Mutual Funds, ULIP, Fixed Deposits, Government securities etc. If you yourself are not able to shortlist a suitable opportunity, refer to companies like Aviva that offer various saving investment plans to take care of your financial goals at different stages of life.
- Funding your Investment
Another crucial factor for you to account for is identifying the funding allocation for your investments. You need to maximise your savings by cutting down on unnecessary expenses. Think on the lines of generating income from other sources as well. This will require a financially disciplined approach from your side. Also, take into account the increase in your income over time and make sure you increase your investment proportionately. This will help you beat inflation easily.
- Develop a diversified investment portfolio
The next important step for you is to create a diversified investment portfolio, which is aligned with your risk appetite and financial objectives. You must ensure that you do not expose your investments to unnecessary risk by allocating all funds to only one asset class. Instead, aim to strike a balance between different investment products to create a diversified investment portfolio. This will help you balance the risk factor while ensuring better returns on your investment in the long run. Mutual fund schemes, saving plans, ULIP plans, Fixed Deposits, and other asset categories must be proportionately represented in your portfolio.
- Monitor your progress
Monitoring your investments is equally important.. Performance of the markets is dependent on a number of factors on macroeconomic and microeconomic levels. If you do not monitor your investments closely, you might lose out on a good investment opportunity or might miss a warning sign. Therefore, you must keep a close eye on the markets as well as the performance on your investments. This will help you take pre-emptive decisions regarding changes in your investment portfolio and keep your financial plan on track.
- Celebrate each goal
Last but not the least- remember to celebrate every financial goal that you achieve. You need not splurge on unnecessary stuff, but you must reward yourself on achieving each financial goal by buying a small gift or celebrating with your family. This celebration will act as positive reinforcement and will motivate you to work even harder and stay on track.
Achieving your financial goals in a systematic manner requires a disciplined approach. Once you have a plan in place, follow it religiously and wealth shall come to you as planned at the right time. Aviva offers an array of plans that helps you plan your savings for your future home, retirement, etc.