7 Easy Steps to Plan Financial Goals for Your Future

“If you don’t know where you’re going, you might end up someplace else” is an adage that applies to every goal in life. Success in any sphere of activity is not possible without a vision and a goal. The same applies to financial success as well. While we don’t know what tomorrow will bring, having a financial road map can help you deal with any exigency and create a secure future for yourself and your family.

First of all, you need to establish a financial planning process. A robust process for financial goal-setting ensures that all aspects of money management are taken care of. Through a series of seven logical steps, you can identify and establish a process that works for you and maximises the chances of achieving your financial goals.

1. List down all goals and aspirations

Making a list of goals can be an introspective process. Put everything down on paper, from the practical goal of saving for retirement to the pressing need of an emergency fund and even the whimsical – such as wanting to own a sports car. You can always whet and fine-tune your ideas later.

2. Define each goal

All the goals that seem important and worthy need to be fleshed out well. Defining a goal requires a two-pronged approach – you need to know exactly what you want you to achieve and the golden number that will allow you to do it.

For example, if you are looking to put together an emergency fund, you need to consider a host of factors – who benefits from this corpus, is it just for you or other family members as well, what are the various risks you perceive with respect to income, health, family, social and economic environment, etc., and what is the cash value in-hand that will allow you to sleep peacefully at night.

3. Keep your goals measurable

A measurable goal helps you track progress along the way. It gives you a clear picture of how your actions are matching up to your intentions and if any adjustments are required. This also makes it easier to determine a savings and investment pattern basis each goal. For example, if you are looking to build a corpus of Rs 1 crore for your retirement 25 years down the line, you will have to invest an average of Rs 11,000 every month till retirement, at an expected return of 8% per annum, to achieve the goal.

4. Set clear timelines

Every financial milestone needs to have a clear timeline for you to be able to measure and monitor progress. Define goals as short-term (up to 2 years), medium-term (2-5 years) and long-term (5+ years). While some goals are inherently time-bound (say, saving for higher education or retirement), others can be managed as per your financial resources (such as a holiday or buying a new car).

Keeping your time frame realistic helps you stay focused. This makes it easier to work out your monthly savings budget and prioritise goals based on importance or urgency.

5. Budget for your goals

At any given point in time, you could be saving for various goals. Create a separate bucket for each milestone – whether for emergencies, retirement, education, holidays, or treating yourself. Always look to invest before spending. Try automating as many investments as you can just after payday so that you can remain disciplined in the long run. This makes it easier to evaluate progress and ensures each goal is pursued separately without being impacted by any issues that affect other goals. 

6. Choose the appropriate investment vehicle

Every goal requires a different approach, so the investment mix will have to be altered depending on the corpus required, the timeline, and your risk tolerance. For example, if you’re looking to buy a car in the near future, you would be better off investing in a debt fund or bank deposit. On the other hand, a long-term goal such as building a retirement fund requires time to compound returns and average out risk and returns, so you should look at direct stocks or other equity assets.

For long-term goals, you can open a Demat Account online with HDFC Bank at zero cost. Take advantage of the 3-in-1 account that offers you a 360-degree savings and investment platform – a Savings Account, Trading Account, And Demat Account rolled into one. Leverage the opportunity to invest in a secure and seamless way to achieve your life goals.

7. Review your investments regularly

It is important to conduct periodical reviews to ascertain progress and see if your investments are performing as expected. You may have to re-evaluate certain investments or goals depending on changes in personal needs and expectations or when necessitated by changes in the external environment. 

As your portfolio grows, monitoring for risk and asset allocation becomes an important exercise to book profits, optimise tax, and ensure your wealth is not eroded on account of volatility.

To stay on course with your goals, you can connect with your HDFC Bank Relationship Manager, who will understand your needs and help you structure a road map for a financially sound future. Looking to open a Demat Account? Click here to get started.

Wondering how to achieve a comfortable lifestyle with investing through a Demat Account? Click here to read more.

*Terms and conditions apply. This is an information communication from HDFC Bank and should not be considered as a suggestion for investment. Investments in securities market are subject to market risks, read all the related documents carefully before investing.