Financial Goals - LESSON - 1
Money is the first thing that comes to our mind if anybody asks us “what do you need most ?” Whether you are a businessman, entrepreneur, employee or self-employed, your obvious choice is money. Admit it! If you say “ no, no, that’s not me” or “my priorities lie elsewhere”, then, these lessons are not for you.
Why is it necessary to have financial goals ? It is necessary, so that, you can plan for your future needs - such as - daughter’s wedding, son’s higher education, dream travel, down payment for home loan, or a major repair to your house . This list is by no means exhaustive. Surely, you’ll have your own priorities.
The very first step in this direction is to save a part of your earnings. For instance, If you are a salaried person, save a fixed percentage of your salary in a separate savings account. Now wait. I can almost hear you saying “don’t I already know this” or “ I already have an SB account.” True. But please go back and check how much money you have actually saved over the past few years. I mean, take out your SB passbook and ascertain. Do not mentally recall and leave it there. There is a reason for doing this physical exercise, which I’ll explain later.
Now, for the next step: Determine how much you can save every month. If you total up all your monthly expenses, you may be left with nothing. Instead, try saving 10% of your salary and use the remaining for your monthly budget. Yes, this does call for a little self-discipline. Be very resolute here. Otherwise, your mind will think of all kinds of excuses to “convince” you why you want to do this exercise from next month, next Ugadi, next Diwali or your next birthday. You know, for certain, that this kind of “next” has come and gone in your life many times. You may even have lost many opportunities earlier by telling yourself “next.” Unless you make some personal changes here to come out of your comfort zone (more explanation in Lesson 3), you may continue to see such “next time” repeating endlessly.
It may help you immensely if you observe that your savings is a part of your wealth. This is so important that I’ll repeat it: your savings is a part of your wealth. That means, if your savings goes up, your wealth also goes up. Whenever you are tempted to put off saving your income, recall this sentence. It may help you to change this sentence to “my savings is a part of my wealth.” In your mind’s eye, look at your savings as such from the larger perspective of your wealth. Then you’ll see why savings is essential.
Just think of all the things that you can buy for your dear family from out of your savings !
As I already explained, this is just the first step. The next step is to convert your savings, periodically, into a fixed deposit. If you do not know anything about Mutual Funds or the Stock market, please stay away from them. Just because your friend told you he’s “making” money in the stock market, don’t jump to invest and lose your hard earned money. Generally, mutual funds (MFs) also invest in the Stock market and if the stock market goes down, so will your NAV. However, if you have the required knowledge to study and understand, it is the stock market and MFs which can grow your money fast. (more information about this in a subsequent Module.)
If you have read this far, perhaps you’re ready to believe that savings will really help you financially. Give it a try. After all, you’ve nothing to lose, but everything to gain. If you do not like the idea of saving, you can always spend whatever you’ve saved. But then, your dreams will continue to remain what they are : only dreams.
Before going to Lesson 2, be ready with your savings account. At this point, do not worry about the low rate of interest Banks offer on savings account. If possible, choose that Bank which allows you to open your account with the least amount as ‘minimum’ balance. Keep in mind that, for this new account, you won’t be needing a cheque book. Without cheque book facility, there are banks which allow you to open with as little as Rs 500.