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How can goal setting help in having a more-equipped financial plan?

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Would you be where you are in your life if you hadn't planned for it? Whether it is throwing a small party for friends and family or making a vacation itinerary, planning is essential for every step of our life. It deters chaos and brings in structure. And if there is one thing that is pivotal in making the right plan, it is the need for a goal. Whether it is an understanding of the places you want to explore while on a vacation or the position you want to be in life, goals always make the process of planning easier. And this is the case with our financial plans as well. Goal setting is key contributor in making a well-equipped financial plan.

Goal setting has been the way of life in almost every front of our life - we plan on a career path, we have a dream company, dream home, dream car, etc. In fact, our lifestyle has always been influenced by the need to set goals and achieve them. This simple yet brilliant practice has been helping people achieve more in life and a financial plan is what helps us reach these milestones. Financial planning is also crucial in preparing us for the downturns or uncertainties of life. But how can goal-setting help in this process?

Identify your goals
Identify your goals
The first step to have a well-defined financial plan is to lay out our goals systematically. While we may have thought of several long and short term goals, identifying and defining them with a proper timeline is crucial in goal setting. For example, you can have an aim of buying a car in 3 years, however, in order to set a financial plan around it, you need to identify the type of the car and(hatchback, sedan, sports utility, etc) a budget for it. This simple step makes all the difference in financial planning. While the value of your 'car in three years' cannot be well-defined, it is easier to assess the cost of a sedan 3 years down the line and get to save for it.


Ease into investing
Ease into investing
While explaining the logic behind having a proper financial plan is easy, actually beginning with the process can seem too much. However, with goal setting, we always have the option of starting small. Begin with simple but essential plans like life insurance, health insurance, etc that is fundamental in every financial plan. Another smart instrument that can help anyone ease into investing has to be ULIPs (Unit Linked Insurance Plans). ULIP is a monthly investment tool that is a perfect mix of insurance and investment. The money that we put into ULIPs is partly invested in market-linked instruments for fixed lock-in periods. Plans like HDFC Life Click2Invest ULIP allows the investor to choose from 8 funds based on their goals.

Start a retirement fund
Start a retirement fund
Retirement fund is one component of the financial plan that we often ignore. Most of us will argue that we are too young to plan for retirement. However, the best time to begin planning for your retirement is as soon as you begin to earn! Building a corpus that you can depend on in old age is crucial to have a stress-free life. Unit-linked plans like HDFC Life Click 2 Retire give investors an easy way to begin instantly. Once you have a clear goal on approximately how much money you need at retirement and evaluating it against the investments you are already making, this retirement plan will ensure that you can live your dream life outside the corporate world! The fact that most funds and investments have a lower premium when you are at a younger age and offer better offers, is what makes planning for your retirement at a younger age more profitable.

At the end of the day, a financial plan is supposed to help you to live a stress-free life and be prepared for the future. And setting specific goals is the first step in making this process more systematic. With the new financial year waiting just around the corner, now is the best time to get started!
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