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Five step guideline to set your financial goal and achieving them

31-Aug-2018 written by : FSI-Team

Financial Goal

Every average middle class individual wants a life where he can live in a house of his own with a family, educate his children well, lead a comfortable lifestyle and finally retire with enough money to get him through his golden years. But alas, while the dreams seem ordinary, achieving them proves to be a tall task for most of us.

This is because we fail to do what matters the most to maintain a healthy financial life i.e. to set a solid financial plan that serves as a roadmap towards the achievement of our goals or even bother to check our one free credit report from CIBIL to find out whether our credit health is in order . If you too find yourself worried about your finances most of the times because your financial life is in doldrums, here is a five step guide to help you set financial goals and go about achieving them.

Envision your financial future

The first step to making your dreams come true is to paint a picture of the future in your mind. You need to ask yourself questions such as where do you see yourself in five, ten, fifteen and twenty years from now and what do you think are going to be the major milestones at these stages. For instance, if you have just started working for a year or two now, do you see yourself checking out home loan interest rates in about five years to buy your first property? Similarly in ten years from now you may wish to have a lumpsum to fund the education of your kids and so forth.

Attach a price tag to your goals

Once you have set your financial goals, your next move should be to determine how much money you need to fulfil each of these dream. What you are essentially doing is putting a price tag to these goals, while keeping in mind important factors such as your current cash flows, your existing financial obligations, the rate of inflation and most importantly your own risk appetite or your tolerance to bear losses.

Setting a price to each of these goals will help you chalk out a road for your investments and provide a direction on the kind of financial instruments you need to achieve these goals. For instance, if you see yourself examining home loan interest rates in five years from now, you will need a considerable amount for the down payment of the same. Just saving up and letting your money remain idle is no good. You need to invest this money you save on a regular basis in a financial instrument that provides commensurate returns with the amount you need for the down payment.

Set realistic short term goals

While looking at the bigger picture is a must, you must not forget the fact that setting small actionable targets will help you achieve those bigger goals. For instance, you may constantly allocate assets towards building a retirement fund over the long term, but make sure that you also have an emergency fund to fall back on at any time. This is because life may throw a spanner at any time and you may find yourself facing a financial emergency. A contingency fund should thus be built in a manner that it can sustain you for at least 6-12 months even if your cash flows were to come to a sudden halt.

Consult a professional

Building a financial plan may seem easy, but with the plethora of investment choices and the many factors that one needs to bear in mind, building an adequate financial plan may become cumbersome. If you are a novice with no previous experience, it is prudent to consider professional help. Hiring the services of a certified investment advisor or a financial planner makes your job easier. A professional can help you identify your financial goals and put you on an investment journey that helps achievement of your goals easier.

Keep a tab on your credit health

While goal setting is of utmost importance to be well equipped financially at every life stage, it is also an imperative to keep a tab on your credit health. Thus just like you keep a watch on your physical health by eating right, exercising and going for regular check-ups, you need to maintain your financial health by maintaining financial discipline and checking your credit report at least once annually. CIBIL provides you the advantage of checking one free credit report in a year.

Now that you know all about financial goal setting and how to achieve them, we hope you will find your investment journey far more effective to meet your goals.


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