Five Easy Steps to Demystify Your Financial Goal

Five Easy Steps to Demystify Your Financial Goal: Lewis Carroll’s book Alice in Wonderland is a popular sentence. In which the Cat (Cheshire Cat) tells Alice (Alice) ‘If it is not decided where you want to go, it does not matter which road you take’. The same sentence also applies to financial planning. That’s why it is important to set a financial target and make better planning on time to meet it. When you do financial planning properly, it keeps you financially fit. It means to say that by doing the right financial planning on time, the challenges in life can be easily faced. You are able to deal with most challenges. And enables you to enjoy the fruits of your hard work, as a result, you live a secure life and without financial problems, you are able to complete all tasks on time and move forward in life. For this you need to keep these 5 things in mind.

Table of Contents

1. Dream a Dream and Give It a Digit

Every target is a dream and a number is associated with the dream. For example, if you want to retire at the age of 50, this can be a dream of yours. And then it turns into a target. When you calculate how much money should be in your bank account to decide retirement at the age of 50 and live the rest of your life. Apart from this, you need to think about how much money will be spent from that savings to meet other goals. How much the burden of rising inflation will reduce your savings. Finally, after retirement, how much money will you need every month for the next 30 or 40 years. Although this figure can be 2 crores or 10 rupees, it depends on the person. But having that number with you in your dreams tells you what things and how much money you need to reach your target.

2. Avoid Taking Loans With High Interest Rates

Taking a loan means mortgaging your property with the financial institution. Think of it like today you only need 3 mangoes and you have mortgaged your entire garden to a financial institution by taking a loan. If you pay 35% interest on your credit card and 22% on personal loan, then it is very difficult for you to reach the target. In fact, paying 22% interest on the loan is equivalent to getting 22% return on the invested portion of your savings. In such a situation, you should think about any suitable investment scheme which will guarantee you 22% return? Any fitness plan fails due to bad habits and money fitness planning is no different. In such a situation, only by leaving bad habits, you can give the right shape to your financial fitness.

3. Keep Arrangements For Emergency Fund As Well

We have learned from education that nothing is permanent. Uncertainty is everywhere. Corona Pandemic brought it to your doorstep. You cannot prevent emergency like situation from coming, but you can plan well in advance for such unwanted challenges. Now the question is how to create an emergency fund? For this, you need to keep some part of your monthly income separately as an emergency fund to deal with an emergency like situation for about a year. For this, you can invest some part of the monthly income in liquid deposit or liquid fund so that it can be used easily when needed. Money kept for emergency fund gives you the safety to invest freely apart from some part of regular income. You can also earn a modest return on your emergency fund without losing any capital. If your emergency fund has been spent due to sudden work, then make arrangements for it first.

4. Get Insurance Cover

Generally, we understand the insurance policy as life and health cover only. But in reality it is much more than that. In fact, a very unfortunate event can wipe out your savings in a jiffy, leaving you and your family bankrupt. In such a situation, you and your family should have an insurance cover. Of course, the first insurance you should have should be a term cover for your life. In such a situation, the cover is available to himself or his family members when needed in bad condition. So make sure that all the members of your family have health insurance. After this step, ensure that you have insurance cover for the assets you own like the vehicle. Apart from this, there should be insurance cover for liabilities like home loan, car loan, personal loan.

5. Invest in SIP iInstruments To Meet The Target

When you plan to achieve the financial target, then it is important to keep two things in mind. You can decide to invest through SIP for planning to meet medium term and long term targets. Fix each SIP for a specific target goal, so that you don’t end up like an Alice in Wonderland character.

If you do this then the question comes in front of you that how much should be saved? First make a target and then work for it. Follow the principles to meet the target. Save first then spend. Focus on spending money on your needs, but cut down on wants. Do not wait for that time to invest that you will not start investing until you have enough money to start saving. If you invest Rs 20,000 per month in equity funds through SIP for 25 years, then after 25 years you will have Rs 5.50 crore on the basis of 14% annual return on that scheme. However, to meet the financial target, more hard work will have to be done in terms of money.

If you go through careful financial planning on time, then you are able to face the challenges of the future very easily. Financial fitness doesn’t just mean investing. Keep in mind the importance of timely loan repayments, liquidity and insurance and prepare yourself to make your dreams come true!

Five Easy Steps to Demystify Your Financial Goal : Follow These 5 Easy Measures For A Better Future, You Will Get Freedom From Economic Worries

1. Dream a Dream and Give It a Digit

2. Avoid Taking Loans With High Interest Rates

3. Keep Arrangements For Emergency Fund As Well

4. Get Insurance Cover

5. Invest in SIP iInstruments To Meet The Target

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