Basics of Starting Your Financial Planning – Set Your Goals

Basics of Starting Your Financial Planning – Set Your Goals

Basics of Starting Your Financial Planning – Set Your Goals

If you ask any successful person in their 30s or 40s about what they wish they were taught in schools a lot of them will say financial management. It is surprising that almost no schools teach this as a compulsory course at any stage. I would say that personal finance is much more important to learn as compared to geography or history. It is a harsh reality, but the world revolved around money and if you don’t know how to manage your own money it can create a lot of problems in the future.

If you have finally decided to pay close attention to your financial health, the start can be very scary. There seems to be too much information, some of it conflicting and a lot of people use technical jargon which seems too complicated to understand. But don’t worry, managing your finances does not require any degree. With a few tips you can confidently stand on your legs in no time.



The first step is to manage your expectations. Why would anyone want to plant their finances? The answer is for securing your future and meeting those wealth goals you have always wanted.

You should divide your goals into two categories. Short term and long terms. The former can be for those small term goals you want to accomplish in a few years. This can include buying that new car or down payment for a house. But more importantly short-term goals also include emergency funds.

Take this pandemic for example, what if you lost your job suddenly or there is some medical emergency. You should plan your finances in such a way that you have at least 6month of cushion in case of an emergency.

Long term goals on the other hand will cover your retirement plans and your children’s college education or their marriage. The point is you can set up your goals in a way which suits your needs.



Once you know what your goals are I would highly recommend to talk to an accountant or any other professional who can guide you through the process. They are called professionals for a reason, don’t shy away from paying a little extra for a better accountant because the value they end up providing far outweighs the extra cost.

A good accountant will help you in managing your goals and guide you through different investment options available. Even if you want to take control of your finances by yourself, a little help in the beginning can go a long way.



Now comes the more difficult and boring part. You need to create a budget before making any investments. Check where you are spending the most money and how much you actually end up saving. This will help in cutting down any frivolous costs. You should aim to at least save 10% towards long terms goals and any additional amount which is needed to meet short-term goals.

One helpful tip is to allocate these savings or investment during the start of the month. So automatically you will end up spending less knowing that you are left with less money. One helpful tip is the 50-30-20 principle. What this means is that divide your monthly income into three parts. The biggest slice of the pie, 50% will go towards essentials such as rent, food, EMIs etc. the next 30% should go towards your ‘wants’ like eating out, cloths etc. and the last 20% towards your long term and short-term goals.

I would also recommend making a list of your assets and liabilities and see how you can increase your asset column. You want to aim towards creating more passive income. This means you want to be making money even when you are asleep.



If you have any credit card bills which are pending, they can become quite costly with the increasing interest rates. Make sure you are caught up with all the payments. This will in turn improve your credit score and make is easier and cheaper to get loans in the future.