As the movie Badlapur tells its audience — “Do not miss the beginning”, we also advise that you go through our thoughts/insights shared in the previous article covering the first step of financial planning

1. The Second Step of Financial
Planning
As the movie Badlapur tells its audience — “Do not miss the beginning”, we
also advise that you go through our thoughts/insights shared in the previous
article covering the first step of financial planning -
Once you know yourself, which stage of life are you at, where do you want
to go, what is your risk appetite etc. it is time to move on to the next step of
Financial Planning. This stage forms the foundation of the plan and getting
this right is of utmost importance. This is the Goal Setting stage — wherein
you decide upon your financial goals and where you need to be in terms of
finances in order to achieve them.
The Second Step
The second step of financial planning is to create your financial goals. This
forms the bedrock of your financial plan. Knowing where you want to go will
not only dictate how much money you need but also the asset class in
which you need to invest. Therefore, setting goals is highly critical. Here are
a few pointers that will help you in setting your financial goals.

2. Write down your goals — with your own hand
Somehow writing something down the old-fashioned way of using pen and
paper adds to the determination of achieving that goal. This is because you
have written something with your own hands. Make that commitment by
putting your goals in writing. Then place that goal where you can see it most
often, this will give you the drive and the focus to ensure you achieve them.
Make it specific
Saying “I will save tax this year” is not enough. You need to do a bit of
homework and make a specific goal which is something on the lines of “I will
invest in Tax Saving Funds or ELSS (Equity Linked Saving Schemes) and claim the
full deduction of ₹ 1,50,000 under Section 80C.”
Make them actionable
If you want to claim full deductions under Section 80C of ₹ 1,50,000 that means
you can start a SIP in an ELSS or Tax Saving Fund of ₹ 12,500 every month.
Breaking your goals into smaller, time-bound targets (like monthly) will keep
you motivated when you cross each milestone of the calendar.
Types of Goals
Usually, we divide financial goals into 3 parts:
Short Term Goals — Which can be achieved in 1–3 years. For example, planning
your taxes for the year or setting up a Contingency Fund.

3. Medium Term Goals — Which can be achieved in 3–5
years. For example, buying that new car or going for
that international family holiday you’ve been wanting
to take (assuming that COVID is well and truly history)
Long Term Goals — These are goals that require a
timeline of 5 years or more. For example, planning for
your retirement or your child’s foreign education etc.
The sturdiness and sustainability of a financial plan is a
function of the goal-setting exercise and depending
upon the goal and the timeframe you wish to achieve–
you will have to invest in the right asset class that will
ensure that you have enough money when you reach
the threshold of achieving that goal.
Once you set goals then the next step will be outlined
in the next article! Keep watching this space for more
on Financial Planning and how you need to go about it.