Feeling stuck on how to establish suitable and achievable financial goals and become financially successful? Follow these 7 steps.
That exotic vacation to Hawaii, that luxurious sedan car you’ve dreamt of, that dream home facing the lake—you have it all planned in your head. But that's not going to happen automatically. You need to plan well enough to set financial goals for your future while also enjoying the journey.
But that's not going to happen automatically. To materialise your dreams, planning your finances is the key aspect. You need to plan well enough that you can achieve your goals while also enjoying the journey.
When it comes to financial management, it all begins with financial planning and goal-setting. If you have this right, then it's half the battle won!
But how can you set suitable and achievable financial goals and become financially successful? Let’s find out.
Steps to Establish Suitable and Achievable Financial Goals
The roadmap to financial success includes establishing suitable, and achievable financial goals in your lives:
Swear by the set priorities
This is the foremost step for establishing suitable and achievable financial goals. You need to set your priorities because this will determine all your future actions.
You should ask yourself: "What do I truly want?" Is it a good retirement life? A big house? Travel the world?
You need to prioritise your desires before you develop strategies for financial success. For instance, your immediate priority would be to complete your education or start a business. You might also desire to buy a car and a house or go on an exotic vacation.
All these priorities will determine your savings strategy. For instance, you may want to book an FD with your lender for a certain amount that you can redeem years later when you are ready to take off to your dream destination…
You need to be SMART with your desires and ambitions.
SMART is the acronym for Specific, Measurable, Achievable, Relevant, and Timely. Setting your ambitions using the SMART technique will enable you to make correct financial decisions.
Continuing the above example, suppose you are willing to start a business. Then you should decide on the amount of capital required (suppose, it’s Rs. 2 lakhs), by when you would start your business (suppose within the next 1 year) etc.
In that case, the goals should be achievable. You cannot desire to have a capital of Rs. 1 crore to start your business within the next 1 year.
Go through the existing financial conditions
You need to determine your existing financial conditions. You need to be aware of your current income, expenses, EMI commitment, and net worth before you set financial goals.
Once you know how much money you have, how much you are earning, and how much you owe, you can correctly determine how much money you will need in the future and how you can earn it.
This is important for successful financial planning.
Setting the goal timelines
You need to bifurcate your financial goals into short-term, mid-term and long-term. Following are some examples of different types of goals based on timelines:
Short-term financial goals: These are the financial goals that you need to achieve within one year. This can include the following:
- Creating an emergency fund
- Repaying credit card debts
- Getting a health insurance
Mid-term financial goals: These are the financial goals that you need to achieve within the next 2-3 years. This can include the following:
- Getting a life insurance
- Pay off your student loans
- Going on that vacation we always wanted to
Long-term financial goals: These are the financial goals with no expiration date. This can include the following:
- Build the dream house
- Education of children (if any)
- Retirement planning
While you prepare the goal timeline, you need to ensure that you remain flexible concerning their achievement to achieve success with money.
For instance, if you have huge existing credit card debt, then shift your goal of becoming debt free to mid-term goals instead of short-term goals.
The idea is to not overstress yourselves but list down your goals using the SMART guideline
Prepare a goal chart
Once you have set your goal timeline, it’s time you prepare a goal chart. The goal chart should contain a list of your goals as per the above timeline and the amount required to achieve each goal.
This will help you get clear about where you want to reach and at what time. Then it's time to start writing down how you can achieve each goal.
Your goal chart acts as a roadmap to financial success. For instance, to repay credit card debt, you need to cut down on your expenses.
To get health insurance, you need to find a good health insurance company. For retirement planning, you need to actively save and invest.
Your actions will depend upon the type of goal and the timeline you have set to achieve the same. You can also use a combination of 2-3 different ways to achieve your goals.
Use financial tools
Using financial tools is of great help when establishing suitable and achievable financial goals. For instance, you can use the SIP calculator to know how much wealth you can create at what time.
Further, you can use the loan EMI calculator to know the amount of EMI and the total interest you will pay at a particular time.
You can use a retirement calculator to know the amount of retirement corpus you will need to ensure a financially stress-free retirement.
Thus, financial tools are instrumental for successful money management.
It is time you started executing. You can begin by clearing your debt. To become truly financially independent, you need to kick out liabilities from your lives.
This is especially true for the ones that attract high interest, like credit card debt, etc. This way, you will free your income so that it can be saved and invested to achieve financial success.
The next step is to focus on investing. The type of asset class that you select will depend on your financial goal, risk appetite, and time horizon.
In a Nutshell
What you just saw were not only the steps to achieve suitable and achievable financial goals but a roadmap to financial success and freedom.
However, to achieve your financial goals, you need to be disciplined with money and investments. That is what most people find difficult. But it’s not that difficult anymore.
Jar App is one of the premier digital gold investment platforms. What’s more exciting about it is the fact that it allows investors to automate their investments using their daily investment app.
You can start investing with as little as Rs. 10. Automating investments in digital gold not only helps increase your assets but also inculcates the habit of savings and investments.
The digital gold has been instrumental in overcoming the shortcomings of physical gold investments. Further, gold investments are secure by nature and thereby can be effective in reducing your overall portfolio risk. It’s time to achieve financial success with the Jar app.