how to set up financial goals in 2022

how to set up financial goals in 2022

we might all get financially stable or settled in, but what we don’t do is set financial goals for ourselves. at every age, we have to be clear about our financial goals and strive to achieve them. paise pedh pe nai ugte beta.

so, first things first, after achieving your financial freedom, you need to take up the responsibility of setting financial goals. this also motivates a person to strive harder in their career to achieve these goals. the goals act as a trigger for you to do better and give you something to look forward to. once you are successful in achieving these goals, that feeling of accomplishment and peace is something else altogether. it is said that a human can never be satisfied. but we say, why should we be satisfied when we have the potential and power to do so much more.

before we begin the gyaan on setting financial goals, let us look at the mistakes adults and teenagers make when it comes to their personal finances.

common personal finance mistakes adults make

1. not having an insurance

this grave mistake is done by so many adults that it is scary. yes, we know you get medical insurance from the company you work at. but what about life insurance? as an adult it is your responsibility to ensure that your family is financially secure and can look after themselves. also, extra medical insurance for your family members will help with sky-rocketing medical bills.

2. failing to prioritise

another major mistake made when setting financial goals is not prioritizing expenses appropriately. it is of utmost importance to pay off debts with a higher rate of interest first. opting for medical and life insurance is much more important than purchasing a car. planning your retirement fund is high on the priority list as compared to your child’s future college fees. how? you or your child can easily apply for an education loan, but can’t go for a loan in your old age. hence, be reasonable and responsible when setting financial goals.

3. lack of emergency fund

not having an emergency fund set aside is a very bad example when setting financial goals. emergency funds act as a knight in shining armor in unexpected situations like damage to the house or accidents. the best example is the pandemic where the workforce across the world faced pay cuts and how thousands lost their jobs. in such a situation an emergency fund will help you and your family to sustain a comfortable life until things are back on track. pandemic has taught everyone this great lesson.

4. accounting for future inflation

with a heavily fluctuating economy, people make the mistake of not considering price hikes and inflation. we celebrate our salary increments, but we need to plan our future financial goals like savings and investments considering both our salaries and increased expenses. party hard with your increment and plan harder for the future.

common personal finance mistakes youngsters make

1. not making a budget

there are only three things that teens need to focus on, and they are budgeting, budgeting and budgeting (what up poooooooo reference!). so, guys, if you don’t budget, you will notice how you are always broke within the first 2 weeks of the month. budget your expenses, parties, aspirational purchases and any other things that you think will involve money. make it your life mantra to budget everything when hoping to achieve the set financial goals.

2. splurging

uh-huh, here is where we all get uncomfortable. splurging! the demon of all failed financial goals. you need to say goodbye to this evil friend of yours called impulsive purchases. you already get limited pocket money, why not budget it wisely and then splurge all you want on your shopping spree as per your plan. it might be difficult, but not impossible

3. owing money

there is absolutely no reason for youngsters like you to get into the habit of owing your friends or other people money. it puts you in a circle of debts which after a point gets difficult to manage. trust us when we say, your parents are your saviours. in case you are out of money for the month, talk to your parents and together you can figure out a way to earn some extra cash from them. don’t lose your vision of financial goals to things like debts.

4. no financial knowledge

with the world growing on steroids (just a figure of speech guys), the teens are getting more and more exposed to financial knowledge. even after the easy accessibility of information, many teens don’t bother about gaining financial knowledge. it’s high time you make use of the technology and learn about future investments, taxes, debts and everything finance. if not, ask your parents or other adults about these things and educate yourself on setting financial goals for your future or even now if possible.

now let’s talk about short-term goals which are important and equally achievable. by accounting for short-term goals it becomes easier to focus on long-term financial goals and fulfil both of them.

short-term financial goals for adults

1. emergency funds

as an adult, you have to start adulting. understand the importance of having an emergency fund and saving some amount of your income into that fund. this fund will help you and your family in unprecedented situations like unemployment, late salary, etc. you won’t have to opt for loans or any other kind of debts unnecessarily. hence, starting an emergency fund should be on the top of your list of short-term goals when setting financial goals. you can start your emergency fund by setting aside 5-10% of your income depending on your other expenses. you can also sell off unnecessary things that you own and don’t use. for example, an old mobile phone or laptop, clothes, and books.

2. pay off credit card bills

another important short-term financial goal for adults is to clear all their credit card bills. there are two major reasons for this – high-interest rates and credit scores. the vicious circle of credit card bills slows you down from achieving your financial goals. the later you pay the bill, the higher the amount you pay and then it’s a never-ending series. hence, pay off your credit bills on time which will also affect your credit score positively for the future.

3. payments for rent, insurance or loans

your short-term financial goals cannot be achieved if you don’t account for rent and other monthly expenses like loan EMI and electricity bill. you also need to set aside a certain amount for insurance like medical or life insurance. these things should definitely be your short-term goals as they contribute towards a major part of your survival and lifestyle. aim to achieve your short-term financial goals as soon as you can so you need not worry about your and your family’s lifestyle.

short-term personal finance goals for teens

1. savings account

so, guys, now that you are in the prime of your teenage life, start looking into your short-term financial goals and take them seriously. you can start off small by asking your parents to open up a custodial savings account for you in a bank with best interest rates. use that account for your savings and transactions for any purpose and at the same time, keep earning interest on it. once you’re 18, you can have the full custody of that account and take your first step into financial freedom as an adult. start preparing for that sweet taste of financial freedom now itself.

2. college scholarships

education fees and loans are not a joke. your parents try to provide the best possible education for you and strive to help you fulfill your dreams. but you need to start taking responsibility for your dreams and account for the expenses involved in it. so, in order to achieve your dreams, play your part and research for college scholarships that will load off the financial burden on you and your parents. don’t hold back when reaching out to the stars when you have amazing options at your disposal. this short-term financial goal will bring you closer to your dreams.

3. research on early investments

investments have no age. you are never too young to start investing as long as you have a custodial account. the younger you start the sooner you can relish in the joys of profits you gain. start looking into investments like SIP, cryptocurrency, mutual funds, FD. etc. you don’t have to invest thousands of rupees. with so many investment platforms like Groww, you can start investing money as low as 100 bucks. learn more about investments with akudo.

the gangsta when it comes to financial goals and planning are the long-term financial goals. these goals determine the kind of future you see for yourself. these goals also shape up your financial and life planning in order to achieve them.

long term financial goals for adults

1. retirement fund

again, this cannot be stressed enough, but planning for your retirement is a gift to yourself in your old age. your retirement days are for you to enjoy them with your family and friends. you don’t want to be running around earning money for basic necessities. it is much more important than saving money for your child’s future education. so always and always prioritize your retirement plan when setting financial goals and research well on the best plans for yourself.

2. purchasing a house

buying a house is very important for Indian families. owning a house is a sign of success and stability. it provides security to families and is a great investment for a safe future. hence purchasing a house should be one of your top long-term financial goals to avoid the burden of rent throughout your life. research on the best real-estate and housing loan options to live your best life.

3. child’s education

saving for your child’s education may not be the only option for their fees, but it is one of the most important financial goals when it comes to Indian families. hence, start including this when setting your financial goals and look for the best options like education loan, fixed deposits or any other type of investment.

long term financial goals for teens

1. travel

the best way to spend your money is on experiences instead of materialistic items. as you grow old, you’ll realize the importance of exploring the world and yourself at the same time. hence travel should be one of your long-term financial goals where you can save up for trips and travel plans. this is the best kind of investment you can do for yourself.

2. budgeting

you might be tired of hearing it over and over again, but that is what makes it important. budgeting is not a one or two-month process, it is a life time process that keeps evolving as you evolve. hence, budgeting is your one financial goal that you should be consistent with throughout your life. there are many budgeting apps that will make your life easier.

3. financial independence

as you grow, you need to and will understand the happiness of financial freedom and independence. like Monica says “welcome to the real world, it sucks, but you’re gonna love it” that’s exactly the case when you become financially independent. it may seem scary initially, but as you come across experiences, it will keep getting better and easier comparatively. you can’t always expect your parents to support you right into adulthood. so, guys pull up your socks and prepare for your future financial independence because it’s yours and yours only.

finances can be tough, but not tough enough. if you set all your priorities straight, your goals won’t be fuzzy anymore. so, take your time and write down about how you see yourself in the future. people, get yourself together and lay down your financial goals for a better and clearer future.

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