GOAL BASED FINANCIAL PLANNING
Our goals can only be reached through a vehicle of a plan in which we must strongly believe, and upon which we must vigorously act. There is no other route to success.
Every individual has financial goals that requires to reach in short, medium- or long-term period. For example, if you plan to buy a car in next 2-3 yeas, it can be called a short-term goal. Likewise, if you wish to plan for your retirement and children’s higher education, then these can be termed as long-term goals.
First, you need to know your various financial goals which you wish to achieve over various time periods. Then you need to figure out the time you have in hand to reach those goals. Once you are clear about these two – goal and the time frame – work out the present cost of each of these goals. Now, apply inflation to the current cost and you know the future value of your goal.
Accordingly, you require to plan your financials. This is what goal based financial planning is all about.
Let us understand in detail why goal based financial planning is necessary??
Why Financial Planning is necessary?
It is very important that when whole life you work for money, there should be some stage in life where money should work for you.
We all have got responsibility and some serious responsibilities. You have to buy a house, get married, complete children education etc, the list goes on and on and on. After completing your basic responsibility then you can dream of purchasing a beach house. But can you afford to achieve that with just retirement fund?? After toiling for whole life sometimes you don’t reach the goal. You know why??
Have you heard the saying “By failing to plan, You are planning to fail”
Don’t worry – its simpler than it sounds. A financial planning is step by step approach to reach one’s financial goals
Even the financial goals require a better planning. Let us understand the important things to be considered while doing financial planning
- Inflation is when you pay Rs. 60, for the 40 Rs. Haircut, Which you used to get for Rs. 15 when you had HAIR.Its very much important to consider the inflation while doing our financial planning. The cost of living and the investment ratio increase due to inflation. Hence while doing a financial planning always take into consideration the inflation rate and the time you would like to achieve the financial goal. In other words Inflation eats up your money and you don’t realise it…Today’s 100 Rs will look like 40 Rs after 10 to 12 years and that’s what is Inflation – The monstor which eats up all your money and purchasing Power.
Disclaimer: All the views in the Blog is personal of the author not attributing to anyone.
