“Would you tell me, please, which way I ought to go from here?”
“That depends a good deal on where you want to get to.”
“I don’t much care where –”
“Then it doesn’t matter which way you go.”
― Lewis Carroll, Alice in Wonderland
The above quote from Alice in Wonderland is very true in every aspect of our life. You see if you do not know where you want to go or what you want to achieve financially or what you want to be; then it does not matter which path you choose.
That’s why GOAL is very important, when you have a goal in mind it is easier to appreciate the benefits of what you are doing. And the absence of GOAL is directly proportional to “why we fail financially”.
“Setting goals is the first step in turning the invisible into the visible.” – Tony Robbins
Having goals make life great, it gives us a meaning, motivates and builds energy.
Most of the time we think we have our goal set such as “I want to be Rich”. “I want to be Rich” is a statement; you can also say it is a vision statement. It does not qualify as goal. It does not state “what is meant by Rich”, “how much assets you have to be qualified as a Rich”, it does not give us a reason or purpose behind this. Hence it is also important to know how to set a GOAL.
“Goals transform a random walk into a chase.” – Mihaly Csikszentmihalyi
First you have to create the “big picture”, what you want to do with your financial life and then separate these into little and little focuses. The best way to set your financial goal is to make your goals SMART.
S : Specific
M : Measurable
A : Adjustable
R : Realistic
T : Time bound
Specific: You should ask yourself whether your goal is specific or not. You should know why this goal, for whom is this goal for, why do you want to achieve this goal, the purpose and benefits behind this goal? Hence the goals should be like:
I want to make 1 Crore as my asset within next 10 years.
“People with goals succeeded because they know where they’re going.” – Earl Nightingale
Measurable: Once you set your goal, you should start working on it. To understand whether you are working towards your goal or not, you should be able to measure it. That’s why the goals which can be measured are successfully achieved. For example if you want to save 2,00,000 for down payment of your car within 1 year, you can measure each month whether your savings are on track or you need to increase your saving or relax.
Adjustable: There are uncertainties in life, due to which your financial goals can get affected. That’s why the goals you set should not be so strict that you cannot adjust it. Let’s say you have a plan for long foreign vacation after 2years and for which you started saving towards this goal. But just before the vacation you came across some urgency for which you have no choice to use your vacation money.
Realistic: You just like that cannot set some random and unrealistic goals. The goals should be based on your ability so that you can really achieve your goal. You should always work on your earning ability so that you can achieve higher things in life, but while setting your goal you should be realistic.
Time bound: Without a timeline, it is impossible to plan and measure your goal. If you have a timeline set for your goal, it helps you to determine how much you have to save/invest each month and for how long. When you set a timeline, you bring discipline into yourself which makes you to succeed in achieving your goals.
Once you determine what you want your financial life to be after 1 year or 5 years or 10 years or even 20 years, it will definitely affect what you do today. In other way, the things you do today will determine what you will be after 1 year or 5 years or 10 years or even 20 years. Hence set your goal SMARTly, since it has a cost associate with today.
“Stay focused, go after your dreams and keep moving toward your goals.” – LL Cool J
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Personal Financial Portfolio life cycle:
Step 1: Awareness
Step 2: Present Financial Status
Step 3: Goal Setting
Step 4: Planning
Step 5: Plan Execution
Step 6: Plan Evaluation
Step 7: Financial Achievement
Step 8: Asset TransferFollow Us In Social Media: