All of us have aspirations in life which we strive to meet. These are usually varied from person to person. Financial goals are basically life expectations which will require money to fulfil or meet. From paying your next rent advance, down payment on your mortgage, buying a land, getting married, getting an education, buy a car, supporting your religious organization etc. How much money will you require to meet whatever goals you have ahead of you?
Setting your goals are the most important part of investing, and Khen Elazar of seekingalpha.com agrees. He says your goals will help you and your financial advisor determine the right strategies to achieve them. Besides, your goals will help you stay on track and not get distracted by other life factors.
Investors are different and have different needs based on their ages, income levels, savings rates and other circumstances. For instance, if your parents are alive, one financial goal would be to organize birthdays, anniversaries and funerals one day. If you do not have any living parent, then funeral money will not be one of your financial objectives. I have been married for ten years and so getting married is not my goal, but this will not be the case for someone who is single and just out of University. They will need to save to cover wedding clothing, reception, decorations and apartment where they will live after getting married.
However, some financial goals are common to everyone; some day we will retire from work and no longer get salaries from jobs. Not everyone will need to buy a car but every human being will need means of transport. The recent covid-19 lockdown has taught all of us an important lesson of saving towards an emergency. Many people have been left financially naked, having no savings to cover living expenses for 2 weeks.
It is therefore imperative to not follow another person’s life and investment goals, but set and pursue appropriate financial goals suitable to you. An Axis Pension Advisor can assist you to work through this process. So, how do I proceed to set my financial goals?
Below are important factors to consider in determining your Financial Goals:
I. Your Personal Circumstances: whether you are married or not, how old you are, your income and expenditure levels will all factor in the goals you should set. I was told a story of someone who spent all his money buying a land at Labone and had nothing left to build. By the time he could organize some more funds to build, the land had been resold to someone else who has constructed a house and living in it. His income level should have been factored into deciding whether having that land is practicable to develop within the timeframe.
II. Investment Horizon: How soon will you need the money to meet your goals? Some goals take years to achieve, others take only months or days.
III. Measurability and Control: Pay attention to factors within your control. You can decide how much money you will put aside every month for investment but the interest rate you get is outside your control. You can only get the prevailing interest rates decided by the market forces.
IV. Priorities: You will need to prioritize your goals. Which goals are very urgent or important to your life? One way of thinking about this is to consider the consequences of meeting or failing to meet each goal. If the consequences are dire on your life and lives of those who depend on you, it is advisable to pay attention to those goals first.
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