2.1 FINANCIAL PLANNING AND GOALS

We all have responsibilities to fulfil, like buying a good house, paying your higher education, or tuition fees. Some big, some small. But do you think this all could be achieved if your parents haven’t had any savings or just be possible with their retirement fund? No. right. 

To make your dream a reality and achieve life goals, one needs to plan their finance/money from the very beginning when you start earning.

Financial planning is nothing but a step-by-step approach to meet one’s life goals. It acts as a guide as you go through life’s journey and helps you to manage your income, expenses, savings, and investments in a better way. You need to have an adequate amount of money to fulfil your goals and desires. More importantly, you need to have money at the right point in time.

 

                                   Division of individual’s goals

For example, if you want to have Rs. 10 lakh for your college education through savings or investments, your parents need to arrange this amount by turning 18. Not a year later. For this, financial planning becomes essential.

2.3 Financial goal setting 

Financial planning requires defining your goals and prioritising them. You can divide your goals into one-year goals or short term, up to five-year goals called the medium-term loans, and more than five years goals called the long-term goals and make your budgets and plans accordingly.

How one can set their goal priorities.

Benefits of Financial Planning 

  1. It helps to set your goals right and achieve it 
  2. Optimutilization on of your finance 
  3. Save for future essentials. 
  4. It helps to Analyse your needs and spend accordingly
  5. Keep track of your funds. 

THINK ABOUT IT! 

Now you know why you are unable to save your pocket money. List down the goals you want to achieve in your life. Divide them into short, medium, long term goals.