Why are Financial Goals Necessary?
Wealth creation has always enticed
all, but is it easy? If you think that your future life is safe with your
present savings, it is time to do a reality check. Are your savings enough for
your future? Have you taken care of factors like inflation, interest rates,
etc.? What if there is an untapped market that can make you abundant with
little time and effort? The key to financial stability lies in the definition
of your financial goals. Having a roadmap will help you plan better,
strategize, cater to emergencies and amass heaps of wealth. Let us elaborate on
why you need financial goals.
Reason 1: It helps you have focus
What do you want to accomplish in the
future, both professionally as well as personally? Categorize them into two
separate groups. Develop a vision statement for each category. Then further
divide them into objectives. It will give a clear action plan about where you
are going. Let us see an illustration. Mr. A is an entrepreneur.
Professional Goals: To Build a
Personal Goals: To Build financial
security for family
To Build a successful business
- Planning Organising funds for resources
- Sales, Marketing and Promotions
- Profit Management/Minimising Losses
- Other Investments
- Dealing with insurance premiums, tax, loans,
and other debts
- Provision for contingency
It helps him stay focused in business
in careful management of business finances.
To build financial security for
- Childrens’ higher education and marriage
- Homebuilding or renovation or both
- Tax planning and Insurance
- Debt Repayment
Financial goals help him with
adequate focus on family needs. And he will not end mixing up professional and
personal goals landing the family in peril.
Reason 2: You can track where you are lagging
When you make a spreadsheet of your
personal and professional finances, you can track your goals. It will help you
stay in the game, and you can ensure that your personal goals do not get
overlooked by your professional ones. Maybe you think it takes a lot of time.
Well, is it better to have a dream life or a life with uncertainties? The ball
is in your court. Tracking also helps you in reviewing your existing goals and
re-shape them based on your financial needs. The customized approach has better
odds of succeeding.
Reason 3: Opens new avenues of wealth, growth, and development
A good financial strategy can give
you abundant wealth as you become proficient on new avenues to earn wealth,
like passive sources of income other than your business. Once you are
financially secure, you can focus on self and organizational growth and
development. Better finance management is the key to success in life. This
income could be dividends, capital appreciation from securities and land,
rental income, etc.,
Reason 4: Makes you Stress-free and Relaxed
Who does not like having a
stress-free and peaceful life? Most people worry about their finances a lot
and, this could further take away sleep and cause other diseases. He can now
easily plan holidays with families, stop thrashing money on parties and focus
on family. Suppose your business is going through a bad phase; if you have
other income-earning avenues, then you will be covered.
Reason 5: Diversification of funds reduces risk
We all know that India is going
through a growth saga. If you are not making use of this opportunity, then you
miss out on something important. Parking your surplus in a variety of options
mitigates your risk to a certain extent.
Maybe your financial goals are not
picture-perfect. But the question is, are they going to help you in the future
or not. For your goals to deliver, you need to have strict discipline. Never
break the rules of your own game. Remember, consistency is the key here.
However much you run short of money, never use the emergency fund for the
family for your business, and this needs hard-core willpower. The beauty of
your life lies in the strict adherence to your financial goals. If you want to
see your family always smile, you will do it. How will you ensure that your
financial goals succeed? We will come to that in the coming sections.
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