Why you should start planning for 3 goals instead of 20

It is a normal human tendency to think big and set grand goals in life. We want to build our dream house but wait for a bigger pay check and hesitate to start small today.

We aim to save crores of rupees for post-retirement years but procrastinate and wait for magic to happen.

Similarly, when it comes to goal planning, we want to set 20 goals all at once and end up ignoring all of them. Because it’s impossible for most of us, right?

The point is to start small and build along the way.

Start with cutting unnecessary expenditures.

Start investing an amount that is feasible for you.

Get adequate insurance.

And then grow along the way.

Today, let’s learn the most basic financial goals you can set for yourself. These will set the foundation for 20 goals that you’ll achieve in years to come.

First financial goal: Retirement planning

We all want to retire early, right? That can only happen if you get your finances sorted. Financial strength can help you retire much earlier in life than you think.

There are several options to save for retirement, like the National Pension System, pension plans, Public Provident Fund, mutual funds etc. Don’t forget to assess the positives and negatives of each scheme and choose the one that aligns with your financial goals.

Retirement planning is crucial because:

• It helps you live a comfortable life even when you are not working 9-5.
• It reduces your dependency on other family members, such as partners, children, etc., and makes you self-dependent.
• Starting early helps you avail benefits of compounding of money over years.
• You can also save taxes by availing exemptions and deductions in various sections of the Income Tax Act.
• It brings peace of mind.

How to achieve it?

Assess your needs and choose a plan aligning with your financial goals, risk appetite and income levels. Start saving or investing as soon as possible. Regularly assess your investments and make necessary changes with time.

Second financial goal: Your children’s education

Children’s education in India has been rising ever since the importance of education has been known. Rising tuition fees and other expenses call for a fund or plan to manage these costs.

If you have two children, then you need to plan for both of your children.

Hence, you need to prepare early.

Saving for kids’ future education is important because:

• It will help you avoid taking on huge debt to cover education expenses, further reducing your burden.
• It will ensure that your children get the best education from the best institutions in the world.
• Sometimes these schemes also allow you to save in taxes, and often the payouts are also tax-free.

How to achieve it?

Start by assessing the amount you’ll need to fund your children’s future education. Consider factors like age and type of course they wish to pursue. Then, choose an appropriate plan that aligns with your goals after assessing the pros and cons. Start investing and don’t forget to review your investments over time.

Third goal: Build an emergency fund

Uncertainties can happen to anyone at any time. Loss of employment, sickness, medical emergency, etc. are some unexpected situations that can lead to financial stress or burden and can deplete your entire savings.

Thus, having an emergency fund covering expenses of 3-6 months is suggested. For this, you can consider investment options like liquid funds. The point of an emergency fund is to withdraw money without hassle.

It is important because:

• It brings financial stability as you can have immediate access to cash when an emergency arises.
• It saves you from taking debt and paying interest on the same, thus reducing your level of savings.
• You can focus on other goals and avoid using your savings for emergencies. Thus bringing you peace of mind.

How to achieve it?

Save at least 3-6 worth of living expenses in a liquid fund or easily accessible investment option. Weigh the pros and cons of each option to choose the one that aligns with your goals.

Regularly keep contributing to your emergency fund and adjust it as per your lifestyle.

What’s next?

Once you’ve made arrangements for these three basic goals, you can definitely move towards other goals in life. This includes saving for home, planning for vacation, preparing for your startup, and much more. Start small and build gradually.

Final words

Focusing on basic financial goals can set the stage for a secure financial future. Once these goals are achieved, you can focus on other areas or plans as you grow in life.

Don’t forget that goal planning is not a one-time event or objective to be fulfilled. It needs constant upgradation and adjustments. You must consult your financial planner to make the best financial decisions.