What are financial goals & how to set them?
What do you see yourself doing in the future? Are you looking for a house with a yard for your dog? To be debt-free from student loans? Put a stop to your credit card addiction? You'll need financial goals to do any of these things. Prioritising your finances by setting financial goals is a necessary requirement for any of these. Let's find out how.
Among several things the pandemic has taught us — one important lesson is that it’s crucial to manage liquid assets wisely. Effective management and appropriation of funds require immaculate planning and setting of financial goals.
Financial goals are objectives that one wants to achieve with their funds in a pre-defined time period. It is important to have fixed goals in mind while creating a budget for your income to avoid overspending. Setting goals and devising a realistic plan to achieve them bears fruitful returns. Moreover, it also brings about financial discipline in life.
Short-term goals
These are small goals that one wants to achieve in a short time frame, usually up to two years. It may include buying a car, going on a vacation. These goals are set by keeping in mind the personal needs that may arise in the near future. Short-term goals can be achieved by setting aside a fixed amount of money every fortnight, month, or every quarter based on whichever option one is comfortable with.
Mid-term goals
Mid-term goals entail what an individual would like to achieve in the next three to 10 years. It can include buying a house, saving for a wedding, starting a business, etc. To accomplish them, higher savings and investment returns are needed unlike in the case of short-term goals.
Long-term goals
As the name suggests, long-term goals are meant to be met over a longer period of time. These include paying off debt, saving for retirement, or children’s education. These are expensive goals that require grit and determination. They can be realised by consistent savings and investments into safe assets to earn a decent interest to be able to accomplish the goal sooner than later.
While one is busy saving money for investment goals, it is imperative to keep an emergency fund for the rainy day so that the savings that are set aside to achieve financial goals are not used at all. It is advisable to prioritise and plan efficiently, and jot down in detail the requirements to meet the goals and work on them consistently.
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First Published:16 Feb 2022, 11:40 AM IST
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