Financial Planning Guide 2025

Chapter 2

Q2. Where do you want to reach?

In the world of smartwatches, everyone, as part of their health routine, has a set target number of steps they want to achieve in a day. At the end of the day, when your watch notifies you of an achievement, it brings a sense of satisfaction—a quiet and straightforward example of goal setting in your daily life, and the principle is quite applicable to your financial life as well.
Defining where you want to reach in your financial life starts with setting financial goals. When listing your financial goals, ensure they are measurable, realistic, and time-bound.
Step 1: Identifying your financial goals
Common financial goals may include:

Purchase of a home
Purchase of a Car
Child’s Education
Supporting your parents
Child’s Marriage
Retirement
Vacation
Buying a Holiday Home
Wealth Accumulation
Creating Trusts
Charity/philanthropy

Step 2: Classify financial goals based on their priority and proximity

Short term (less than 3 years)
Medium term (3 to 5 years)
Long-term (more than 5 years )

This will help you determine which goals to prioritize and channel your investments accordingly, based on the time to the goal and your risk profile.

Step 3: Quantifying your goals
If a goal is not quantified, it becomes tough to select a path to achieve it. Again, this can be divided into two parts, minimum and maximum. For example, you may have a goal of funding your child’s higher education.
For this, you can consider the following scenario:
For educational goals, the fee range is substantial, depending on the stream and type of education, ranging from a minimum of Rs.10 lakhs for domestic education to even Rs. 1 crore or more on the maximum.
Now you know that the minimum you need to achieve is Rs. 10 lakhs in today’s terms. You can start investing accordingly.

Step 4: Plan & Invest towards your goals
Once your goals are quantified, i.e., you have a tenure, an amount, and a clear idea of your retirement, your child’s education, marriage, asset purchase, and other objectives, it is time to plan for these goals.

Additionally, note that conflicting goals are an everyday reality for everyone. You must do your best to resolve this difficulty by allocating your available resources in the most efficient manner possible to those goals with the highest priority. For example, spending on a lavish wedding for your child should be given lower priority than planning for your safe retirement.

You must also regularly evaluate your investment progress.If the progress towards the goal is not satisfactory, then one or more of the following options can be exercised:

Review your investments and adjust specific investment amounts/investment instruments as needed.
Push the goal further back, where possible. For example, if you plan to retire at 50, consider retiring at 55 instead, which will give you more years of earning potential.
Reduce the goal corpus that is required. If you’re looking to buy a house for Rs. 75 lakhs, consider a house for Rs. 60 lakhs instead.

Setting your Goals is typically not an ongoing process. You can set your goals and begin working towards them, and review your progress toward them once a year.

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