Riding bicycles is an activity none of us forget, it’s something we all were perplexed and jittery before starting and were scared of falling. The spirit of learning and reaching the goal kept us going, relying on support wheels had only kept us moving away from our goals. But relying on the experienced/coach holding our seat made us a better cyclist thereafter.
This has worked for all of us because the coach had a plan and knew when to let you go on your own. Now if you look back and glance at your memories you might think no matter how simple it was, a coach with a plan is so important to your success.
Investments for many is analogous to learning bicycles. But how would you react with your investments? Would you continue to be on training wheels to feel safe or follow a wise tutor/ mentor/coach, trust his insights and remain invested. It is a very simple choice to make, but making the right choice is what we want to do!
At different stages of life, we have different goals. The young millennials entering workforce goals are different than the goals of a household couple with children. It is now well established that goals are something more substantial than dreams or wishes. Once you make a wish and have an action plan behind it, you are now staring at something real. This is especially true for a financial goal. All our financial goals should have a time horizon, regular investments and a period of commitment to reap the benefits. Using goals helps you to match your time horizon to your asset allocation, which means you take on the optimum amount of risk.
Statistics show that only 3% of adults have specific, measurable, time-bound goals and they achieve 10 times as much as people without goals.
If you’ve never thought much about this, here are some good financial goals that everyone should have especially for the young workforce.
1. Have an Emergency Fund
Imagine yourself in an unplanned situation, like you or your dearest one’s lying on a hospital bed, or being subjected to workforce reduction, it can be stressful circumstances. Have you saved enough money for such unplanned crisis? Having an emergency fund now will help you sail the rough weather without having the stress for your financial needs. The size of your emergency fund typically should help you cover your financial expenses for the next 3 to 4 months without cutting down daily necessities from your budget. Fulfil your emergency goal first. This has to be your top priority on financial planning list. If you can save money for an emergency fund, then you can save money for any financial goal that you have.
2. Short-term goal
Short-term goals are generally smaller in scope and rupee amount with a definite target date for accomplishing them. A short-term goal is one that you’d want to achieve in a year or two. Buying that relaxing new couch or the much-needed trip with your loved ones to Europe or a romantic getaway at Bali is another good one. Having a short-term goal also means you have a horizon to pick the best deal and plan your goal accomplishment in detail. For short-term goals, incorporate the estimated cost into your monthly or yearly budget as a new expense separate from your emergency goal/long-term goal and start saving now.
3. Intermediate-term and long-term goals
Any Goal set aside for more than 5 years can be termed as an intermediate or long-term goal. This may take several years to accomplish and, as a result, require longer commitments and often more money. Examples might include buying a home, saving for a child’s college education, or a comfortable retirement. It looks tough but is doable with some discipline savings and getting to financial acumen. It is good to set your retirement goal early and having to set an auto transfer to your retirement funds from your salary account helps. .Now you clearly know what you have left with and can plan your current expense. Over a period of time the corpse amount will swell. Keep an eye on your investments, keep reviewing your risk and take actions accordingly.
In this hectic world, you have little space to make errors, especially when planning for your financial success. Fortunately, now you don’t have to.
Today you do have an option to create a strategic approach defined by your unique needs and methods to help you work toward your financial goals. New age financial tools can help you set your goals, track your investments and achieve your financial needs at a click of a button. Goal-based wealth management is now simplified in many ways. Goal setting is also now validated to let you know if you would reach your goal or actions to be taken to reach your Goal. Be it an emergency fund, short-term or long-term goal, once achieved you only have to explore your new investment goals.
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