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Why are financial goals important?

Author: Viral Bhatt/Wednesday, March 6, 2019/Categories: Exclusive

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Why are financial goals important?

Imagine starting your car, and having no knowledge of where to go. A destination is an ultimate objective when you travel. Without that knowledge, traveling can seem worthless. Similarly, financial goals are a must, when you earn. Financial goals can be anything, like buying a house, a car, a vacation, early retirement etc. These goals are something that you strive for, or to be more generic, these are the things that help you survive the 'Monday blues'(pun intended).

Are financial goals really that important? Let us understand why.

Focus

If you don’t have any particular objective ahead, you can barely strive for it. The question will always persist, “what am I going to do with this money?” Instead, if we have financial goals, the answer will be much easier and the focus would be on achieving it in time if not before. This will aid in having a more focused approach towards our work and ultimately towards our financial goals.

Plan of action

Planning of expenses, savings and income all are extremely crucial in achieving your financial goal. This planning gives you an idea about how much do you need to save so as to buy a house or plan a vacation. In case of insufficient funds, a solid plan of action allows you to help reach your goals. It can be done by doing some freelance work or cutting down unnecessary expenses. However, without any specific goals, you cannot have a plan of action.

Retirement

Corporates do not offer any pension. Additionally, we cannot work throughout our lives, even if we wish to. That makes financial goals of paramount importance, as they are essential to help you be in control of where and when we want to retire. With a happy and peaceful retirement as an objective can help you plan your finances and investments accordingly.

Priorities

A birthday party or the credit card payment? Such questions arise in front of us time and again. Planning in advance can help you avoid such dilemmas, and above that, you can achieve them both without much difficulty. Financial goals are ever present in our lives as we change our priorities depending on our needs and resources. Financial goals allow you set your priorities straight and stops you from impulsive spending.

Review

The gap between where you are and where you want to be in terms of your finances can be bridged with the help of a review. This review is possible only with the help of your financial goals. Without a review, you cannot judge your performance so far and cannot carry out necessary changes to get you back on track. In addition to that, review keeps your earning and spending in check. It constantly reminds you of your ultimate objective and thus, keeping your priorities straight.

Meaningful life

This is a very subjective matter, yet very apt to the subject line. A life without objectives can seem very lethargic and uninteresting. Plus this would affect the overall body language and performance. Financial goals act like salt in food, they provide the source of hope and inspiration to overcome all the difficulties and achieve something that gives a sense of achievement. A life without goals can be very depressing. On the contrary, financial goals can bring that essence to life which gives it a valuable meaning.

Self-sufficient

Setting up financial goals is the first step toward self-sufficiency. Being self-sufficient allows you to be independent and generates a sense of responsibility. Financial goals can help you become self-sufficient, where you become the caretaker of not only yourself but also of your future generation by creating ample wealth.    

Emergency

One of the important aspects of a financial goal is to create funds for an emergency. Medical bills, car repair, house repair or associated expenses, do not need an invitation to enter your life. Financial goals help you in creating cash reserves that can helps you at the time of need. This ultimately help you be on track of your ultimate objective without any significant disturbance to the original plan.

Bringing dreams to reality

Who says dreams don’t come true? Of course they do and all it needs is planning and setting up proper financial objectives. Success never really depends upon perfection; rather it depends upon consistency. Financial goals are the first major step towards bringing your dreams into reality. They work their way slowly but steadily towards the finish line and in the end achieve what looked like a distant dream. Financial goals can define our dreams, which later results in bringing obedience into our expenditure and income.

Assets & Wealth Creation

Eventually this always is one of the objective, if not the only. Asset or wealth creation always reduces the burden on your future generation. For example, if you buy a property, the rent expenses of your future generation are taken care of. Likewise, wealth can also be created to cater to future needs such as children’s marriage or further education etc. A financial goal is the basic ingredient of creating long-term wealth and assets.

So there it is. The above-mentioned points are why one should have financial goals. The list isn’t exhaustive nor conclusive, although it does offer you enough reasons to plan your goals. The significance of financial goal has its presence felt in your life, and motivate you to achieve the same. It need not be perfect, because life is full of uncertainty. Expenses can sometimes occur out of nowhere, but maintaining the consistency and trying to match the desired levels is all you need for successful achievement of these goals.

The author is head of Money Mantra, a Mumbai-based financial advisory firm. He can be reached at viralbhatt@gmail.com

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