Financial education is never thought in school and like many, I started my job without any idea of what my financial goals should be. Like most of ab-initios, I also wanted to prosper fast and quick and have more money in my hands with every passing year. But how do I wisely invest this money was something I had no clue about. But fortunately I once got hold of a book titled Financial Planning for year 2001-02 and I read this book cover-to-cover in one weekend. I was so fascinated about the book that I read the book 5 times more. Felt great, it was like I know how to grow my money (of course after I have some as a capital).
Before going into any detail about investment, the first important step is to make financial goals. Financial goals are seen as mitigation to risky situations in your life and these will protect your dependent family and self against hard crunch financial situations. They are also used as a tool to keep focussed and draw your monthly spending limits. The best way to focus on your goals is write the financial goals on a piece of paper and visit this paper every few weeks.The financial goals can be abstractly stated with timeline like I want to buy a appartment or it can also be very microscopically detailed like I want to have Rs 500000 in my bank account. Normally speaking financial goals are set for the next few coming years, but it is up to you to draw your own time horizon. Here is an example:
1-Jan-2013: Accumulate 12 shares of L&T in my demat account.
1-Jan-2014: Have Rs 400000 in my PPF account.
1-Jan-2015: Reach a networth of Rs. 1000000
Once the financial goals are set, planning needs to be done to realise this into reality. Planning would verify if the goals are feasible or not. If a goal is seen to be infeasible then a correction needs to be applied as the time draws closer towards to goals.
Before going into any detail about investment, the first important step is to make financial goals. Financial goals are seen as mitigation to risky situations in your life and these will protect your dependent family and self against hard crunch financial situations. They are also used as a tool to keep focussed and draw your monthly spending limits. The best way to focus on your goals is write the financial goals on a piece of paper and visit this paper every few weeks.The financial goals can be abstractly stated with timeline like I want to buy a appartment or it can also be very microscopically detailed like I want to have Rs 500000 in my bank account. Normally speaking financial goals are set for the next few coming years, but it is up to you to draw your own time horizon. Here is an example:
1-Jan-2013: Accumulate 12 shares of L&T in my demat account.
1-Jan-2014: Have Rs 400000 in my PPF account.
1-Jan-2015: Reach a networth of Rs. 1000000
Once the financial goals are set, planning needs to be done to realise this into reality. Planning would verify if the goals are feasible or not. If a goal is seen to be infeasible then a correction needs to be applied as the time draws closer towards to goals.
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