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Achieving your financial goals

Larissa Fernand

That is something you don't manage to do. You start saving with a particular aim in mind but then something else comes up and there goes the little piggy bank. Maybe you are saving, but don't really know what you are saving for. Follow these steps to help you achieve your financial goals.

1. The first step in achieving your goals is to list them and then prioritise them. So you need to renovate your house and budget for a holiday abroad and buy a music system. Which one has to been achieved first? Getting guests over a couple of months down the road? Then maybe you would like to do the renovation first. The holiday is anyway not on the cards till the end of next year. And where the music system is concerned, there really is no hurry.
   
2. Put a price tag to each. To do this you will have to be very, very concise and clear on what it is you are working towards. Does renovation mean just a paint job? Is it restricted to just one room in the house? Are you planning on changing the furniture? What about the upholstery? Depending on what you have in mind, you can determine the cost. As for the holiday abroad, take into account not just the airfare but also the visa costs, airport tax, hotel costs (if you are not visiting family or friends), shopping and any other sightseeing expenditure.
   
3. Now that you are aware of which needs are most important as well as how much it will cost you, set a time frame. Allocate separate budgets for each and start working towards it. Or, if your income does not justify saving simultaneously for three goals, then just save towards one at a time. So once the renovation is done, start saving for the holiday. But in all this, it is assumed that you are keeping a separate fund for retirement or for a rainy day which is not to be compromised on.
   
4. Another way of achieving your goals is to take a loan. How much of debt can you incur? The answer can vary from 25 per cent to 40 per cent of your gross income, depending on whether you pose the question to a conservative or an aggressive risk take. For this you will have to look at two factors: your comfort level with debt along with your net worth. If your income is just sufficient to get you by, it is ridiculous to think of taking a loan because you won't be able to service it. If you have to urgently meet your goal, then you may be forced to do so but make sure that you can comfortably repay the loan. On the other hand, if you have substantial assets and are not comfortable with the idea of being in debt, then use your money. Also, if you have to meet your goal with urgency, tapping your assets may be the only option.
   
5. Get yourself medically insured. God forbid, but should you meet with an accident, or, on the other extreme need a bypass, your hospital bill could set you back by around Rs 1,00,000 at least. Say bye to all your dreams and start from scratch. The only option: get yourself medically insured. No doubt, you will have to settle these bills first before you get reimbursed by the insurance company. But at least, you will get reimbursed. If not, your savings could get totally wiped out and worse still, you could end up in debt.

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