Kudos, you have taken an initiative to improve your personal financial planning! Before you can think about anything else, stop right now and ask yourself “Why?” Always “Begin with an end in mind” Having clear purpose and goals of investment is quintessential for your success.
Make no mistake; setting up your financial plan is an overwhelming thing to do. So, it is very important to clearly define your purpose and goals. Sort this out first before getting into any kind of investing. Ensure that you define the goals along with the timeline as clearly as possible. Clearer your goals and purpose are, robust your plan will be.
Considerations for defining goals
Current Baggage: Jot down all your current commitments, aka loans and debts. It must also include you necessities like rent, family essentials, food etc. Review your last couple of months spending patterns and understand where you spend your money.
Immediate Necessities: Understand what would be your needs over the next 1, 5 and 10 years! Depending on where we are each of us might have necessities like buying a car, owning a house, marry someone or saving up for their kids’ education / marriage. Define your upcoming major expenses.
Ideal Lifestyle: What kind of life do you want to lead? Ask yourself a simple question: “If money is immaterial, what are all the things you would be doing?” This will give you a fair idea of what is your expectation and where you are currently!
Retirement: Gone are the days where at specific age you stop working and ride towards the sunset! With the tech boom and multiple lifestyle influencers, early retirement is increasingly becoming goal of the crowd. So, ask yourself when you would like retire and what would you like to do after retirement
Time: Most important aspect, it simply doesn’t wait for anything or anyone. Once you have defined goals, you should most certainly assign a time target of achievement! These doesn’t necessarily have to be accurate to a date but this acts as a guiding principle for all your financial goals
You can keep questioning yourself until you are convinced of your purpose of investment! This is the MOST important step in your investment journey and so take your time, think over it, sleep on it and make sure you are damn certain in your goals!