Be SMART in your financial goals

|
  • 0

Be SMART in your financial goals

Saturday, 23 April 2022 | Hima Bindu Kota

Be SMART in your financial goals

Prioritise and plan for a comfortable future

Every year April brings new beginnings for most Indians through festivals like Ugadi, Gudi Padwa, Vishu and many more. A new year is the harbingerof new hopes and new goals, both personal and financial. Setting goals helps you to develop a way to measure your progress and to be on the right track; and having a financial goal will push you to have a different view about your money. But why should you have a financial goal?

Well, having financial goals will make sure that all your routine decisions are influenced by them and your overall financial health. The benefits of setting financial goals are many. Financial goals guide your planning and strategy to reach your destination by focusing on your priorities. They make you disciplined and accountable, provide motivation and commitment to achieve your goals and improve the chances of success. When is a financial goal more achievable? You are more likely to achieve your financial goals when they are SMART - Specific, Measurable, Attainable, Relevant and Timebound.  Let us look at a SMART financial goal.

Having SMART financial goals helps you set target and make an action plan. In the above example, you will have to save `10,000 per month for 5 months to create a family emergency medical fund to meet any untoward expenses. From this perspective, what can be some of the financial goals that you can aim for in 2022?

Pay off your expensive debt. Chaos in the world doesn't seem to stop any time soon. As we were limping back to normalcy from Covid pandemic, uncertainties and inflation arisen out of Russia-Ukraine war are playing havoc. So, now is a good time to have a financial goal to completely be free from expensive debt. Create a SMART goal to be absolutely debt-free in a specific period of time.

Research and be ready to invest.Now is also a good time to research about great companies to invest in. Always remember one of the golden rules of investing - invest in businesses, not stocks. Take this opportunity to identify fundamentally strong companies and focus on long term. Now wait for the right time to buy the shares of these companies, when they are selling at discount at the stock market. Choppy financial markets in 2022 may provide great deals and stocks at discount for investors. Saving and being ready with funds to invest wisely can be one of the financial goals of 2022.

Plan your retirement. Retirement planning is one of the most essential financial goals. It is important to have a comfortable and secure retirement without compromising on the quality of life. A thorough and SMART planning can help build the financial cushion to achieve your retirement goals. A clear idea about your time horizon, expected expenses and accepted level of risk tolerance is the starting point.

Create an emergency fund. In these uncertain times, it is imperative that you create an emergency to the tune of three to six months of your earnings. An emergency fund is a fund that helps you tide over necessary expenses without taking the burden of unplanned loans and increasing the credit card bills. If your monthly earnings are Rs. 50,000, then the emergency fund can be somewhere between `1,50,000 - `3,00,000. The extent of your emergency fund is also dependent on the type of family you have. If you a single-earning member or have school going kids and dependent parents, the savings in an emergency fund should be higher. You can create an emergency fund in a number of ways - cash, savings account, fixed deposits with a shorter maturity, liquid mutual funds or a combination of all.

Goals, both personal and financial, have a tendency to be abandoned before accomplishment. Therefore, it is crucial to develop SMART financial goals and take small positive steps towards achieving your financial goals and improving your overall financial health.

(The writer is Associate Professor at Amity University, Noida. The views expressed are personal.)

Sunday Edition

CAA PASSPORT TO FREEDOM

24 March 2024 | Kumar Chellappan | Agenda

CHENNAI EXPRESS IN GURUGRAM

24 March 2024 | Pawan Soni | Agenda

The Way of Bengal

24 March 2024 | Shobori Ganguli | Agenda

The Pizza Philosopher

24 March 2024 | Shobori Ganguli | Agenda

Astroturf | Lord Shiva calls for all-inclusiveness

24 March 2024 | Bharat Bhushan Padmadeo | Agenda

Interconnected narrative l Forest conservation l Agriculture l Food security

24 March 2024 | BKP Sinha/ Arvind K jha | Agenda