Your financial sustainability can play a significant role in your life. Right from safeguarding your future to meeting your life long goals, your finances can be crucial for everything. Although working hard every single day for fulfilling your financial goals can be the first step towards turning your dreams into reality, using these top five smart steps mentioned can be beneficial for fool proofing your investment plans:
- Prioritise your goals
The financial goals of every individual can vary based on the life stages. As your life progresses at every step, you should prioritise your goals to achieve them at every stage of your life. For instance, when you are young, your financial goals can be to purchase a new house or a car, explore exotic destinations, and so forth. After you get married or start a family, your goals can be to fund your child’s education, plan your child’s dream wedding, retire peacefully, etc.
- Create a budget
To achieve your goals, you should have the right financial backup. If you want to fund your life goals, you should keep a tab on finances with the help of a budget plan. A budget can be your game plan for financial success. When you draft a budget, list down your monthly expenses, such as groceries, utility bills, rent payment, and so on. Moreover, consider all the expected spending during that period and start saving for your financial goals accordingly.
- Choose goal-based investing
Financial goals can be divided into two categories:
- Short-term goals
It can comprise of the purchase of a new estate or a car, vacation, business venture, etc.
- Long-term goals
It can consist of your child’s education, retirement, and so on.
Based on the timelines of your goals, you should choose investment tools. For short-term goals, you can select those types of investment plans with a lock-in period of three years or less, such as Equity Linked Savings Scheme (ELSS), Fixed Deposit, and so on. If you want to achieve long-term goals, you should invest in a Unit Linked Insurance Plan (ULIP), Public Provident Fund, etc.
- Build an emergency fund
An emergency fund can be an accumulated corpus to tackle unannounced contingencies, such as medical emergencies, loss of income, physical disability, job layoff, and so on. Since it can allow you to provide financial backup during an unfortunate event without creating a hole in your pocket, you should save a specific proportion of your income every month. Ideally, you should build an emergency fund to look after the expenses for the next 3-6 months. That way, you can have adequate resources during emergencies as well as you might not have to deplete your savings for other purposes.
- Opt for adequate coverage
Financial coverage can be imperative to secure you from the uncertainties of life. To receive the continuous flow of financial coverage, you should choose the right life insurance policies based on your requirements. Although there are various life insurance policies, such as endowment plans, money-back plans, etc., you should select a term insurance and health policy for you and your family members. While a term plan can look after the financial well-being of your loved ones in your absence, a health plan can cover the medical expenses of your family during a medical emergency.
To conclude, the financial backup can allow you to fool proof your financial goals with ease. While there are several other ways to fund your goals, these above-mentioned steps can be some of the crucial steps that you can count on to meet your goals faster. In addition to this, your financial discipline can determine the pace of reaching your goals. Therefore, see to it that you take the right measures, keep a tab on your finances, and fulfil your dreams sooner.