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19 October 2020 | 4 min read

Achieve Your Financial Dreams By Following These Simple Steps

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Consider this scenario: You have your list of long term and short-term goals ready. You know what your financial dreams look like. Your long-term saving plan is ready too. Sounds perfect, doesn’t it? Is that all you need to achieve your dreams of financial freedom?

It would be best if you answered some questions very honestly even to begin thinking about funding your dreams. Where do I want to buy a house? Which brand of car do I want? What will be the cost of purchase and then maintaining these assets? Will I be able to achieve these easily, or do I need to lower my expectations? Honest answers to these questions will determine the course of action that needs to be taken. For starters, if you invest regularly, even a little amount every month will grow bigger with time. This is called systematic investment planning. Are you expected to know it all when you dream big? Not at all! Thankfully, there are experts to help you; there is endless information available on television, the Internet, books, etc. But before you look at all those resources, here are the five points you need to keep a check on if you wish to finance your dreams effortlessly:

1. Are your goals time-specific?

Time specific goals

Ideally, you should have a detailed discussion with your spouse or your family to define and understand your goals. Your long and short-term goals should be as clearly defined as possible, making notes of goal date, the amount required to achieve the goal by the date, amount you can easily contribute each month towards meeting the goal, etc. Vague, loosely defined, wishy-washy targets almost always easily get overlooked and forgotten as time goes by, especially if you are facing tough times and cannot manage your other expenses. Specific and time-bound goals make you feel more committed towards them and instill a better saving discipline too.

2. Are your goals practical?

Practical financial goals

It is great to dream big. It is even encouraged to dream big. However, you need to ask yourself if your goals are realistic, practically possible, and within your reach. This in no way means that you must lower your standards or your expectations. It simply means you need to plan well and work hard. For your goals to materialize, you must be able to work on plans towards achieving them; for which, they must be doable.

3. Have you considered inflation rates?

While starting with your investment plans and contributions towards achieving your goals, you should also discuss with your financial planning expert what the inflation rate trends are for the short-term and long-term future. What costs you Rs. X today will cost you much more in the next five or 10 years. Calculate the percentage at which each of your expense is growing and ensure that you aren’t making plans for your future goals keeping in account the present costs.

4. Do you have a priority list ready?

Make a priority list

Any successful financial plan means setting your priorities right. Understating and differentiating your needs from your wants and making a high to low priority list is a must-do before you even start making an investment plan. For instance, buying a house can be your top priority, while investing in a holiday home in your favourite hill station can be much lower on your goals list; if your work mainly involves working on a computer then buying the best version available should be picked over buying the latest LED TV. Necessities and long-term planning should always take over other aspirational goals. Accumulating a healthy corpus that is large enough to accommodate and fund your requirements after retirement should be taken into consideration too.

5. What investment plan should you choose?

Investment plans

Directing long-term savings into low-risk/ low-return asset categories can be a cardinal mistake. It can make all your careful planning go down the dumps. Best way to allocate assets, monthly contributions, and long-term investment plans must be done only after consulting a chartered accountant or a personal finance expert. The choice of savings plan must be carefully aligned with your long- and short-term goals. Best tax-saving plans, tax-efficient long-term financial returns, strict discipline in monthly contributions, systematic investment planning, etc. cannot be side-lined at all. These days, there are a number of options available, and you can pick the one that suits you best.

Having financial dreams like paying off loans, buying a home or care, is always easier than actually accomplishing them. Having said that, things become much more comfortable when your goals are well-defined and practically workable, your investment plans are chosen wisely, and your risks are all calculated well in advance. These are tools that set you on the right path and help you find your dreams independently.

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