Welcome back! I’m glad you found this series interesting enough to come back for the next installment. Let’s look at this learning journey as a project with milestones. And like every project that you have worked on, the first step here also begins by identifying and listing one’s goals.

So pen and paper ready… let’s start by jotting down your life goals. Goals are your personal milestones which you definitely want to meet successfully!

Begin with planning for emergencies and contingencies which are unpredictable.

  • Plan for medical emergencies, a maternity/paternity break, sabbatical break or job loss too. These steps are high priority and include,
    Create an emergency fund equivalent to 6 months life style expenses (include loan EMI and insurance premium in the monthly expenditure even if it is paid annually).
  • Take up adequate pure life insurance (also known as term insurance) and medical insurances for yourself and your family.

    Now with the emergencies out of the way, let’s think about your goals ready to take place in the coming years,

  • Short term (next 1-2 years)
    For example, buying a vehicle, child’s school admission fee or gifting for a family wedding
  • Medium (coming 2-5 years)
    Here, buying a home, starting an entrepreneurial venture or taking an overseas world vacation.
  • Long term (occurring after 5 years)
    Children’s education or retirement

Please note that children’s education corpus is based on your child’s age and could fall into any one of the time horizons. For eg. My child is 12 years now and will be ready for a graduation program by 2021, so my time horizon for this critical goal is medium term.

Why is this time period so important?

Essentially, we MUST align our investments with the time available to achieve them. If my child is in class 10 now and we need to plan for a major outflow in the next 2 years, it would be foolish to invest into equity hoping that my investments will not be affected by market volatility. When the goal is to be met in the short term, it is critical to invest safely with either debt mutual funds or fixed deposits.

Now that your goal list is ready, prioritise and be SMART about them.
All goals cannot have equal priority even if they seem to be equally urgent. Money is and will always be a limited resource; prioritising ensures that the most critical goal gets the required attention and care to be reached successfully.

To summarise, identifying our financial requirements has just 3 key steps,

  • First, plan for emergencies.
  • Next, list and write out your goals, with time lines and today’s cost of achieving it even if it seems like a tall laundry list.
  • Finally, prioritise them in order of importance to your life, not in order of which year it will come through.Like the riddle goes, “how does one eat an elephant?” and the answer goes “chew it bit by bit”. Enjoy this first bite ☺

Leave a comment

Guardian Capital Investments Advisors Pvt. Ltd © 2023. All rights reserved (Non-Individual)

SEBI registration number: INA200005380

Valid till - August 16, 2026

BASL Registration Number: 1690

Principal Officer - Aseem Sen Gupta
M: 9560030404 E: aseem.gupta@gcia.in