The concept of studying abroad is so appealing that turning it into reality is alluring and appealing. Many students fantasize about studying in another country. But what makes it so unique? Well, abroad is special for all Indian students. Isn’t that right? Foreign countries hold a special place in our hearts. However, the goal of studying abroad comes with a huge price tag. Whether you’re a child looking for a new toy, a teen looking for a new video game, or an adult looking for studies or a career overseas, we’ve all tried to save up for something that is now financially out of reach. This is where financial goal setting comes into play. Whether you are in your 20s or in your 50s, it is imperative for you to be well-versed with their financial goals. Learn all about financial goal setting for students and working professionals through this blog.
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What is Financial Goal Setting?
Financial goals are the long-term objectives you establish for yourself on how you will save and spend money. The stage of life in which you usually determine the sort of goals you want to attain. For example, if you’re at college, it may be as simple as saving for a new pair of shoes or as difficult as saving for a car. They might be things you want to do in the near future or the future. In either case, it is generally simpler to achieve your objectives if you establish them ahead of time.
Importance of Financial Goal Setting
Setting financial goals can help influence your future by influencing your behaviour now. Setting financial objectives can assist impact your future by influencing your current behaviour. Like other costs, it should be included in your budget. As a result, you may take tangible measures toward achieving objectives while still allowing room for other expenditures. Determine how much time it will take to achieve each objective and how much money you will need to give throughout that time. Apart from that, here are some more reasons why financial goal setting is important.
- Helps in achieving financial goals: It helps you determine as well as achieve your short and long-term financial goals and create a balanced plan to meet those goals.
- Financial understanding: When quantifiable financial objectives are defined, the implications of actions are recognized, and results are assessed, financial comprehension improves. Giving you a fresh perspective on your budget and giving you more control over your financial situation.
- Helps in identifying real assets: It is desirable to have a nice ‘cushion’ in the form of assets. However, many assets are accompanied by liabilities. As a result, determining the true worth of an item becomes critical. The ability to settle or cancel liabilities is accompanied by an awareness of your money and the establishment of financial goals. The whole procedure contributes to the creation of assets that will not become a burden in the future.
- Motivates you to save more: Our grandparents often advise us to always ‘save for a rainy day.” However, unexpected financial adjustments might still knock you off course. Hence, it plays an important and vital role in our lives and it also motivates us to save more for any unforeseen situations or for our growth, future goals, and aspirations.
- Improves standard of living: Financial goal-setting helps improve the standard of living of an individual as proper management of funds helps an individual in earning extra money which helps them in enhancing their standard of living.
How to Set Financial Goals?
Enlisted below are 6 vital steps that you should keep in mind while planning for financial goal setting.
- Determine what is important to you in the near future. Put everything on the table for review and weighing, from the practical and urgent to the fanciful and remote.
- Determine what is achievable, what will take some time, and what must be part of a long-term strategy.
- Use a SMART method of setting financial goals. To put it another way, make sure your goals are Specific, Measurable, Achievable, Relevant, and Timely, aka SMART!
- Make a budget that is reasonable. Get a good grasp on what’s coming in and what’s going out, and then use that knowledge to achieve your objectives.
- Hopefully, your rigorous, realistic, watertight budget will reveal at least a few bucks left over. Whatever it is, have it automatically deposited into a separate account tailored to meet the first two items on your priority list.
- Keep track of your progress. Check to see whether you’re meeting specific targets. If not, take some time to consider what went wrong.
How to Achieve your Financial Goals?
Making a strategy that prioritizes your financial goals is the best approach to achieve them.
When you analyze your own objectives, you will see that some are broad and far-reaching, while others are more focused. Your objectives can be divided into three-time categories:
Short-term Financial Goals
Short-term goals tend to be narrower in scope and of short time horizon. For example- taking a vacation with college friends, buying new branded clothes for college fests, buying a scooty or a bike, etc.
Mid-term Financial Goals
Mid-term financial goals have a higher scope than short-term financial goals and their realization takes approximately 3-5 years. Applying SMART planning goal setting helps in having a clear picture of the financial goal as well as its blueprint. For example- saving for your grand birthday party, finishing a diploma, degree, or certification program, etc.
Long-term Financial Goals
Long-term financial goals are usually your big-picture costs. Realization of long-term financial goals takes several years or even decades. For example- buying a car, saving for your future education abroad, saving for your higher education like master’s or PhD.
All of this may appear intimidating, but it is important to set these financial goals and then segregate them as short-term, mid-term, and long-term goals. Prioritize first, then execute. You develop confidence in your decision-making after completing some of the easier targets. This motivates you to attain the more challenging goals that need more time and dedication.
So this was all about financial goal setting. Whether you have just completed your studies and are ready to pursue your higher education abroad or are in your mid-30s or 40s, one should always know that the ropes of financial goals lead us to have a financially secured life. For more such financial tips and informative reads like these, stay tuned to Leverage Edu!