Imagine starting your car, and having no knowledge of where to go. A destination is the ultimate objective when you travel. Without that knowledge, travelling can seem worthless. Similarly, financial goals are a must, when you earn. Financial goals can be anything, like buying a house, a car, a vacation, early retirement, etc. These goals are something that you strive for, or to be more generic, these are the things that help you survive the 'Monday blues' (pun intended).
Are financial goals important?
Focus: If you don’t have any particular objective ahead, you can barely strive for it. The question will always persist: What am I going to do with this money? Instead, if we have financial goals, the answer will be much easier and the focus would be on achieving it in time if not before. This will aid in having a more focused approach towards our work and ultimately towards our financial goals.
Plan of action: Planning of expenses, savings and income are extremely crucial in achieving your financial goals. This planning gives you an idea about how much you need to save to buy a house or plan a vacation. In case of insufficient funds, a solid plan of action allows you to help reach your goals. It can be done by doing some freelance work or cutting down unnecessary expenses. However, without any specific goals, you cannot have a plan of action.
Retirement: Corporates do not offer any pension. Additionally, we cannot work throughout our lives, even if we wish to. That makes financial goals of paramount importance, as they are essential to help you be in control of where and when you want to retire. A happy and peaceful retirement as an objective can help you plan your finances and investments accordingly.
Priorities: A birthday party or the credit card payment? Such questions arise in front of us time and again. Planning can help you avoid such dilemmas, and above that, you can achieve them both without much difficulty. Financial goals are ever-present in our lives as we change our priorities depending on our needs and resources. They allow you to set your priorities straight and stop you from impulsive spending.
Review: The gap between where you are and where you want to be in terms of your finances can be bridged with the help of a review. This review is possible only with the help of your financial goals. A review without financial goals is like a bird without wings, totally futile. One may ask what is the connection of review with a financial goal? The answer is, without a review, you cannot judge your performance so far and cannot carry out necessary changes to get you back on track. In addition to that, a review keeps your earnings and spending in check. It constantly reminds you of your ultimate objective and thus, keeps your priorities straight.
Meaningful life: This is a subjective matter, yet apt to the subject line. A life without objectives can seem lethargic and uninteresting. Plus, this would affect the overall body language and performance. Financial goals act like salt in food, they provide the source of hope and inspiration to overcome all the difficulties and achieve something that gives a sense of achievement.
Self-sufficient: Setting up financial goals is the first step toward self-sufficiency that allows you to be independent and generates a sense of responsibility. Financial goals can help you become self-sufficient, where you become the caretaker of not only yourself but also of your future generation by creating ample wealth.
Emergency: Medical bills, car repair, house repair or associated expenses, do not need an invitation to enter your life. Financial goals help you in creating cash reserves that can help you in time of need. This ultimately helps you be on track with your ultimate objective without any significant disturbance to the original plan.
Bringing dreams to reality: Success never really depends upon perfection; rather it depends upon consistency. Financial goals are the first major step towards bringing your dreams into reality. They work their way slowly but steadily towards the finish line and in the end achieve what looked like a distant dream. Financial goals can define our dreams, which later results in bringing obedience into our expenditure and income.
Assets and wealth creation: Asset or wealth creation always reduces the burden on your future generation. For example, if you buy a property, the rent expenses of your future generation are taken care of. Likewise, wealth can also be created to cater to future needs such as children’s marriage or further education, etc. A financial goal is a basic ingredient of creating long-term wealth and assets.
The significance of a financial goal has its presence felt in your life and motivates you to achieve the same. It need not be perfect, because life is full of uncertainty. Expenses can sometimes occur out of nowhere, but maintaining consistency and trying to match the desired levels is all you need for the achievement of these goals.
(The writer is Founder, Money Mantra, a personal finance solutions firm)
