Skip to main content

Is it important to have Goals oriented Savings?

Is it important to have Goals oriented Savings?


A friend of mine is earning a lakh a month, and when I asked him, how much is he saving per month, his reply was close to 30k per month. While saving 30% of monthly income is a good savings rate, when I asked him if he has assigned any of the goals to his savings, he went bonkers. Even, as per World Bank Data Gross Domestic Savings for Indians in the year 2014 was 29%. But savings without goals is like doing multiple graduations in various courses without knowing the purpose. Remember those good old movies, where our Hero used to keep money in different kitchen utensils for different purposes – Behan ki shaadi, Naya Ghar, etc. etc.
There are many benefits of assigning goals to your savings be it in any asset class – Gold, Equity, Debt. In fact one can select asset class depending on the goals. If Goal is for short term like 1 year or so, one can look at fixed income instruments like FD’s or Debt Mutual Funds. And if Goal if for longer duration like 20 years, one can take advantage of equity returns over this longer span.
Assigning Goals also reduces the chances of using that money/savings for some other purpose. It is a Human tendency to use money for other things when it is not assigned to any particular goal. Only if I know I am saving this money for my Daughter’s higher education, I will not touch it for a foreign trip.
In a nut shell, when you start savings, don’t forget to sit with your family members and financial planner to assign goals to your savings. It will indeed give better direction to your savings.
Charu Hastir, CFPCM is founder member of www.theriteplan.com. Rite plan is an online financial planning portal created to achieve a single objective of providing easy and Do It Yourself Financial Planning to netizens. Rite Plan is wholly owned by Tikkun Olam Financial Planning Services LLP. Please visit: https://theriteplan.com/index.php?route=common/home/
Labels:

Comments

Post a Comment

Popular posts from this blog

What is Financial Planning?

What is Financial Planning? One of my friends came to my place for a cup of coffee and while chatting over how life is going, where is it heading, he told me that his elder daughter wishes to go abroad for her graduation. And when I asked him that how is he planning to fulfill her wish, he just laughed it off saying that her graduation is 10 years away, why should he get worried about it now. This attitude of his made me think about the importance of planning ahead of our financial goals and how many of us are conveniently ignoring this very fact. The Term Financial Planning defines itself as planning your finances well. It is a perfect marriage between your finances and your life goals. Efficiently managing your expenses and savings in order to achieve your future goals is nothing but Financial Planning. What are future goals? They differ from person to person. Some might want to take a luxurious trip abroad and some might wish for own home. But there are few goals which m
11 comments
Read more

Should you start Big when it comes to your investments?

The other day I met a Startup entrepreneur who was just talking about the importance of starting and that also starting big. As per him, a small game or investment had more chances of failure in comparison to playing big. I could understand being an entrepreneur myself that he is only thinking about launching big obviously with the backing of some deep pocketed private equity firm. But hey, I have also seen start ups who started small and made it big eventually slowly and steadily step by step. Same is the case when it comes to investments. Should we start only when we have a big chunk sitting in our bank account or should we start small in systematic manner slowly accumulating our wealth. Let’s hear out some benefits of investing regularly rather than waiting to strike gold with the larger chunk of money. 1.        Less fear of markets If you are a regular investor who invest systematically, you don’t need to time the markets as your investments are going to the markets
8 comments
Read more

Why your Financial Plan is always Work in Progress?

Ever heard someone saying, this is my last month in the Gym, after that there is no need for me to workout ever again…I will stay fit for the rest of my life without any fitness regime. No one can retain the perfect physique forever without exercise. It is always a constant effort to stay at the desired level for almost anything that you think of. You cannot be a great chef without trying out new recipes, you cannot be a great marketer without adapting to new marketing strategies, you cannot be a great fashion designer without adapting your fashion sense towards the trending styles. Leave all of this, you even cannot even think of becoming a good parent if you don’t change from old tricks to new methods for upbringing this generation kids. If you have to upgrade your act with every other thing in life, then how your investments could be any different. The Financial Planning Process has 6 broad steps with the last one focussing on the importance of monitoring and revision of t
3 comments
Read more