OAL BASED FINANCIAL PLANNING
A person, in normal course of life, will have many goals. They may be Personal, Financial, Social, Physical, Educational etc. We all accept, Whatever the goal may be, there must always be a plan. Setting mere goals doesn’t guarantee achievement. Planning and Executions are on the other side of the coin.
So, in this article, we will try to provide you answers for hows, whats, and most importantly whys of a GOAL BASED PLANNING.
WHATs:
1.What is meaning of goal-based planning?
It’s not uncommon for a person to have more than one goal at a specific point of time. Often this challenges a person as to how to manage multiple goals. Goal Based Planning is a comprehensive, coordinated and organized approach to money management.
“A goal-based planning helps us to achieve multiple goals across different stages of life by clearly defining and segregating each one, prioritizing among them, keeping in view monetary factors and time frames and making a plan to achieve each goal.”
2. What are the steps involved in this process?
A. A Goal Based Financial Planning provides a solution to dilemma of a person in 4 steps:
1.Define different goals,
2.Quantify the goals in monetary terms,
3.Adjust for Inflation effect,
4.Make an investment plan to meet these goals in future. Simple right?
3.What is Goal Prioritization?
A. Often, when there are many goals to achieve, which is very normal, we fall into a dilemma. As a result, we may end up messing things around rather than achieving. Goal Prioritization is prioritizing particular goals based on monetary requirement and time frame.
4. What are the advantages of Goal Based Planning?
A. There are one to many advantages for this approach. Some are:
- Save and invest more for goals
- Disciplined Investing
- Help to achieve goals one by one with more clarity
- Help to allocate available resources aptly between different goals
- Help become debt free
- Can plan for tax aspect while investing for different goals
- Help to increase life style in a sustainable manner
WHYs:
1. Why should one follow this approach?
A. Every person wants to live tomorrow better than yesterday. We set goals in many aspects, often confusing which goal to fund immediately and which is goal can be delayed. We are sure, even you have gone through such a situation. If that so, take a deep breath, Goal based planning provides a solution.
2. Why is it important to stay focused here?
A. Saving money doesn’t automatically ensure you achievement. Having a goal based financial plan, saving and investing according to plan are important to achieve set goal.
HOWs:
1. How does one start with this process?
A. List out the goals, find their monetary value and time frame for the goal, prioritize them, allocate available savings and resources based on their priorities, monitor them constantly, sit back and see the dreams come true.
B. It is always advisable to consult a financial planner to take the idea forward.
2. How much corpus do one need to follow the approach?
A. One can start at any stage with any amount of corpus. It works best when started early and under constant supervision.
3. How is constant supervision done?
A. Over time, financial situations, goals and time frames change. Implement these changes into the base plan and make necessary adjustments. In this way, with help of constant monitoring, near and important goal get to be noticed and one can act promptly.
Conclusion :
While every type of goal need attention and perseverance, financial goals require a little more effort. A goal is just a wish without a plan. Have a plan and win the game.