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Know How Goal-based Financial Planning Is Helpful To You

Goal-based Financial Planning
Even as young children we planned our lives. Whether it was our birthday party or in the later years, how to finish all those chapters before the big exam date. We had a goal and we planned. When adulting happens and more responsibilities come, life goals become more demanding and planning then becomes inevitable. And when it comes to financial goals a good plan can be the smartest thing you invest in.

Goal-based planning helps you identify life milestones, ascertain the monetary value for achieving those and then put in action the process of determining the best financial plan to fund them. Women multitask when it comes to taking care. They think about what they need for home, what their children need, how they can help their spouse/partners in creating a good life and even care about their parents’ needs. And so organised goal planning is a smart idea.

Most people have similar financial goals in life. Buying a house, funding education for self or children, a retirement plan. However, in recent times living a healthy life and planning for a medically sound future has also become a priority. An increasing number of women are invested now in taking regular tests, keeping fit and following a healthy lifestyle. And since they are so committed to their health their financial goal planning must include health insurance too.

There are many good reasons for goal-based financial planning. You are systematic about your life goals. You consciously make an effort to identify long-term plans. You look at investment plans, contingencies and are smart about the money. And you are confident that you will get what you want vs dreaming about it or regretting not having done something when the time was right.

A lot of women think if they don’t make money they don’t have a say in financial goal planning. On the contrary the process when executed together as a family instills financial discipline and inculcates financially responsible behaviour. You avoid procrastination and are committed. And therefore, goal-based planning is something that needs to be encouraged from a very young age and together as a family.

Importance of Goal Setting

Therefore, the first step in this process is to identify goals. You can divide your goal basket into short-term and long-term goals and prioritise your needs. A retirement fund and health fund are a constant in most people’s list and they need consistent systematic planning. But if you know that in the next few years you want to upgrade your skills with another education break or if you are planning to start a family or if you want to invest in a house then the timelines will definitely differ and therefore the urgency of planning too.

Break it down

Long-term goals can be overwhelming and may require a different approach. Take for instance a retirement fund which you need to build over a period of time. With the help of a financial planner, you can break it down to several short-term strategies that over a period of time, invested in diverse portfolios can yield more results. Choosing timelines and spreading strategies over a period of time is as important as fixing a goal. In a lot of double income families sometimes the partners decide to split the goals and make use of financial policies specially aimed at women to maximise on the financial benefits.

Right investment approach

Next comes identifying the right investment approach for a particular goal. Health plans for instance need a wide coverage insurance policy. Education and home loans should be taken with the best moratorium period, interest rate and terms to pay back the loan. For retirement plans you weigh several options from SIP investment plan in mutual funds, blue-chip equity stocks to looking at your provident fund contribution. There are several women centric investment plans and one should ask their financial advisors for those.

Regular monitoring and analysis

A good financial planner can help you in taking these decisions keeping even uncertainties in mind. Market volatility and inflation play an important role in long term planning and therefore regular monitoring and analysis of investment plans is necessary. Whether done  by your financial planner or you, it is important to regularly keep reviewing plans and making changes, as the need be, to get the most out of your invested money. It could be that the investment market has something better to offer or a current plan is slow in returns and with that insight you can diversify your portfolio.

Last but not least, a smart goal-based plan also includes creating an emergency fund which should roughly be equal to 6 months of your monthly expenditure.

American entrepreneur, author and motivational speaker Jim Rohn famously said, “If you go to work on your goals, your goals will work on you. If you go to work on your plan, your plan will work on you. Whatever good things we build end up building us.”

Disclaimer: Reach out to your financial advisor for a better understanding of your risk management needs and investment tools.

The article is published in collaboration with BSE Investors’ Protection Fund to spread awareness with respect to personal finance and investing, especially for women.


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