Define Your Financial Goals

Defining your financial Goals is an important step in Financial Planning Process. We all have dreams and wishes but to fulfill them we need to write down these Financial Goals and take step towards achieving these goals.

Examples of Financial Goals are Children Education, Children Marriage, Dream Home, Retirement Corpus, World Tour, etc.

The most neglected part of this process is writing down these goals. We vaguely remember these numbers but never sit down and calculate the actual amounts to achieve.

Quantifying your financial goals is an important thing and one should do it as early as possible.

e.g. Let us say you want to send your son/daughter to a reputed institute for MBA. Now a days the cost of MBA in a good college is between 20 to 25 Lakhs. Suppose your child is 5 years old now. So, he/she will require this money after 17 Years. Considering an inflation of 8% p.a., amount required for his/her education would around Rs. 75 Lakhs. 

See this is the dark side of compounding. When your money grows with compounding we feel so happy. But compounding plays the same role on expense part also. So, first define your financial goals then quantify them and start acting as early as possible.

Another important part in Defining your financial goals is segregating your needs from wants. First try and cover all your needs and then start planning for your wants.

Please find below mentioned are few examples of NEEDS and WANTS.

NEEDS: 

1. Retirement Corpus

2. Children Education

3. Children Marriage

4. First Home (For Occupancy)

WANTS:

1. Dream Home

2. World Tour

3. Dream Car

4. Farm House

Please watch below video to get more idea about how to define your financial goals.