Goal setting, some of you are already familiar with this term, is an important exercise during the beginning of the appraisal year.

Goal planning , from a financial planning perspective, is as important. Unlike your appraisal this spans across multiple years .

Successful athletes, businessmen and achievers - all of them set goals in life. This gives life a purpose, a meaning. It provides you long term vision. You now know where your efforts need to be focussed. Your time is put to best use.

In this article, we are talking about financial goals .

What is a financial goal ?

If you have a goal set in life and if it requires money, we would term this as financial goal. In such a goal, you would save money in the beginning , so that you are able to spend that money to achieve your goal.

For example , you have a goal to retire by 50. You are currently 35. You have 15 years to accumulate your savings , direct them to an appropriate savings instrument which will provide a return appropriate to the goal that you had in mind. When you are 50, you can spend this money for the rest of your life without worrying about money.

Let us assume you have a goal to reduce weight by 10kgs in 2 months. You plan to do this by exercising 1 hour every day in the nearby park and reduce your calorie intake by 50. In such a goal, as there is no cost involved, we would NOT term this as financial goal. However, if the same goal would be achieved by going to gym, where you would be paying a recurring fee , it could become a financial goal. Your financial goal would then be to finance your health goal.

What are the typical financial goals in life ?

If you are around 30, the following goals typically come up in life :

1. Buying a house
2. Child/ren education
3. Child/ren graduation / post-graduation
4. Child/ren marriage
5. Retirement

You need to ensure that all of these goals, that span a life time, are SMART goals.

What are SMART goals ?

SMART goals are :

Specific

Goals which are well-defined, absolutely clear without any ambiguity.

What do I want to accomplish ?

When do I want to achieve this goal ?

Why do I want to achieve this goal ?

Measurable

You should be able to track the progress of your goals. You can break your goals into multiple tasks / activities

What is my progress indicator ?

How do I know if I reached my goal ?

Achievable

Your goal should be challenging but NOT impossible

Do I have the capability to achieve this goal ?

Has this been done before ?

Relevant

Is this goal relevant to the current context of things ?

Is this goal reachable within the time and resources available ?

Is this the right time to do this ?

Timebound

It provides you a deadline to focus on

By when do I plan to achieve this goal ?

A possible example of smart goal could be as follows :

I need some help in setting my financial goals !