:: SEBI Investor | Money matters: Financial Goals and Budgeting ::

Financial goals are targets to achieve specific financial objectives within a specified timeframe. By establishing clear financial goals, one can take control of finances and work towards securing financial future.

Setting Financial Goals

A good financial goal should be SMART i.e. Specific, Measurable, Achievable, Realistic and Time bound.

	Description	Incorrect Approach	Right Approach
Specific	You need to know exactly what you want to achieve and when you want it.	I need to set aside money for my grand daughter’s birthday next year.	I need to set aside Rs. 1,000/- for next ten months for the celebration next year.
Measurable	A goal should be measurable so that you know when you will achieve it.	I will pay off most of my credit card dues soon.	In the next six months, I will pay off all my credit card bills in disciplined manner.
Achievable	Your goal should be within a reasonable reach.	I will save money.	I will save Rs. 48,000/- every year by setting aside Rs. 4000/- every month.
Realistic	Your goals need to be based on available resources which you can achieve reasonably.	By saving regularly, I will become a millionaire.	By saving regularly, I will be debt free by January next year. If I continue saving regularly after clearing all my debt, by next December I will be saving the sufficient amount to fund six months of my living expenses.
Time-Bond	Goals with timelines allow you to track your progress and encourage you to keep going until you reach your goal.	I will save money for my daughter’s marriage.	I will save Rs. 50,000/- every year for next 10 years for my daughter’s marriage.

Budgeting:

Budgeting is the process of creating a plan for how you will spend your money.

Budgeting helps you to gain a clear understanding of your financial situation by documenting all sources of income and expenses, control spending, saving money, paying off debt and work towards your financial goals.