How To Get Smart About Your Money

written byAtanu Sengupta
posted on

Money drives many decisions we make on a regular basis. Setting goals will help us take control of such decisions and feel more confident.

What are the Financial Goals?

The personal, big-picture objectives you set for saving and spending money are financial goals. In the short term or further down the line, they can be things you plan to achieve.  Either way, if you identify them in advance, it’s much easier to reach your objectives. The stage of life you’re in usually determines what type of goals you wish to achieve.

Any plan you have for your money is a financial goal. For instance, a budget is your financial goal for this month, whereas saving for retirement is a long-term financial goal. Your goals should give you focus and keep you accountable.

Do you know what you want?

If you don’t know what you want, you can’t get what you want. Therefore, accurately determining the goals is the most important step in the financial planning process.

Defining your goals includes the following steps :

  1. Writing down your financial goals

  2. Attaching the cost to each of the goals and

  3.  Determining when the money will be needed to achieve these goals in the future, 

You will only reach them when you set goals, evaluate them, and determine whether you can make the requisite financial commitment to achieve them.

Based on time horizons, financial goals are divided into three categories: short-term goals, mid-term goals, and long-term goals.



An important step towards becoming financially secure is to set your short-term, mid-term, and long-term financial goals. You’re likely to spend more than you should if you’re not working towards something specific. If you need money for unexpected expenditures, you also will come up short, not to mention when you want to retire.

1.Short-Term Financial Goals


Short-term goals should be achieved over a period of 1-3 years. It needs a careful strategy to cover the expenses you foresee in the next few years.

Examples Of Short Term Financial Goals:

  1. Emergency Fund

  2. Personal Expenses

  3. Buying a Car

  4. Payment towards Credit Card Bill, Rent, EMIs, Student Loans, etc.

  5. Minor Repairing and Home improvements

  6. Taking a vacation

  7. Wedding and other ceremonies

Possible investments for achieving short-term goals:

Fixed Deposits, Recurring Deposits, Savings Accounts, Liquid Funds, Short-Term Debt Funds, Short-Term Bonds, Treasury Bills, etc.

2.Mid-Term Financial Goals


Medium or mid-term goals fall between short and long-term goals. Typically, it takes about three to seven years for mid-term goals to be achieved. They are still attainable with patience and hard work, a little more expensive than a daily goal. The mid-term goals are paying down a credit card balance, a loan, or saving for a down payment on a car.

Common Mid-Term Goals:

  1. Paying for children's education

  2. Home modification

  3. Buying a second car

  4. Traveling to an international destination

  5. Regular income

  6. Starting new ventures

Possible investments for achieving mid-term goals:
Medium/ Long-Term Debt Funds, Monthly Income Plans, Equity Oriented Hybrid Funds, ETFs/ Index Funds, Large Cap Funds, Direct Stock buying of big companies.

3.Long-Term Financial Goals


Long-term goals are generally the cost of the big picture. It can take several years or even decades to reach these goals. Usually, distant goals need more money and regular attention than short-term and medium-term goals.

Common long-term goals:

  1. Retirement fund.

  2. Child Marriage

  3. Child’s Higher Education

  4. Support Parent’s old age expenses

  5. Paying off a Home Loan

  6. Buying a Second Home

Possible vehicles/ investments for achieving long-term goals:

The diversified portfolio of Large, Mid & Small-Cap Funds, Direct stock buying, Index Funds, PPF, EPF, NPS & other long-term Govt’s Small Savings schemes.

4.How to Set Achievable Financial Goals


Think Smart:

Consider all the necessary components of a plan, not only the goal but the steps you're going to take to achieve it.

A strong basis for setting any goal is to make sure it’s “SMART”:

  • Specific

  • Measurable

  • Achievable

  • Realistic

  • Time-bound

Set Specific Goals:

Setting specific goals is very important so that you may understand precisely what steps you need to take to achieve them. For instance, having a goal like ‘How to avoid wasting money or ‘How to go about investing’ is very vague and doesn’t offer you a selected success metric to go by. An example of a selected goal would be - “I wish to save Rs 2000 each month in my emergency fund” or “I want to form a habit of saving by putting aside Rs 100 a day in my savings account.”

Set Measurable Goals:

Measurable goals allow you to assess your progress and stay motivated through your financial journey. For instance, take a goal like “spend less” - if you don’t know exactly what quantity you wish to cut weekly, you won’t know whether you’re succeeding. Instead, if you say “I’ll spend Rs 1000 less each week on ordering food”, then you'll be able to check in with yourself every week and evaluate how you’re doing.

Set Achievable Goals:

While it’s great to challenge yourself if you don’t set realistic goals it makes it easier for you to give up. So start by setting attainable goals, keeping in mind your experience and willpower. For instance, if you’ve never saved money before, an achievable goal would be “I’ll save Rs 50 a day.” In other words, your goals should keep your spirits up and encourage you to move along in your journey. As you attain those smaller goals, you'll surely end up setting more challenges.

Set Realistic Goals:

It’s important to set goals that truly interest you and align with your life goals. For instance, if you don’t really need to buy a house, you wouldn’t be excited when you save up for a down payment. Instead, if your goal is to travel the world, then you need to set your financial goals accordingly. Also, don’t be deterred by the goals your friends and family set for themselves - after all, your goals are unique to you and need to bring you an innate joy. To come up with relevant goals, Write where you see yourself in 5 years - what does your life look like? Are you debt-free? Do you have an independent house with a garden? Or are you traveling the world and sharing your stories through a blog? Once you've got an idea of what you hope to accomplish in the future, you'll be able to begin to break down these objectives or life plans into specific, relevant, and measurable financial goals.

Set Time-Bound Goals:

Like any other goal you may set, you need to make sure your financial goals have a specific deadline thereto. This helps you measure your progress along the way and take proactive action if needed. For instance, if you have got a goal of “saving 3-6 months worth of living expenses in an emergency fund” you would like to set a timeline to this so that you stay on trackand actually succeed.

Write them down:

Mark them down after you've identified and vetted your goals. This will keep priorities simple, structured, and tangible. Fill in, or use a notepad, a worksheet, or a spreadsheet. Check in periodically and track your progress. Once you've crossed one goal, move on to the next one.

 Reward yourself:

It wouldn't have to feel like a challenge to set goals. Reward yourself for making progress and for reaching goals. You will focus on more exciting goals after you have addressed high-priority goals, such as creating an emergency fund, planning for retirement, and shrinking debt. This could include making more money, saving, starting a business, or saving for a major purchase such as a laptop, car, or apartment.

It is usually a two-step process whenever we talk about pursuing any financial goal: 

1. Ensuring healthy savings 

  • Tracking your expenditure is the first and foremost thing to be done. When you diligently start doing it, you would be amazed at how small expenses add up to a large sum. This record-keeping will pave the way to minimize unnecessary expenses and pump up your savings rate.

  • Savings generally come after all the expenses have been taken care of. When setting financial goals, this is a classic error. Ideally,   we should first take out the planned saving amount and manage all the expenses from the rest.  

  • The best way to get around the uncertainty that financial plans always pose is to learn to create a budget. Decide in advance about how to organize spending.

  • Make savings a habit rather than a goal. It should be broken down into habits to accomplish any goal because habits are more natural for people to adapt to.

2. Making smart investments     

Savings by themselves don’t take anyone too far. However, savings, when invested wisely, can do wonders.

  • Choose your investment instruments wisely

  • Start investing early so that time is on your side and you can bear the fruits of compounding.

To help you achieve goals, you'll need to save enough and invest those savings wisely so that they grow over a period of time.


The points listed above are why one should have financial goals. The list is neither exhaustive nor conclusive, but it gives you ample reasons for planning your goals. The significance of a financial goal has its presence felt in your life and motivates you to achieve the same. It does not need to be flawless, because life is full of 


The first major step in turning your dreams into reality is financial goals. Slowly but steadily, they work their way to the finish line and eventually fulfill what seemed like a distant dream. Our dreams may be characterized by financial objectives, which later result in obedience being brought into our expenditure and income.