Turning Dreams into Reality: How SMART Goals Can Help

Ever felt like you're swimming in a sea of bills and expenses without a life raft? It's a common feeling. You work hard, but the shore of financial stability always seems to drift further away. What's missing? Goals. Think of it like this: you wouldn't drive without a destination, right? So why navigate your finances without a plan? Goals give you that destination, that focus. They're your financial GPS, guiding you through the twists and turns of money management.

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How to identify your goals?

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Step 1: The purpose: List what's important to you.

Step 2: Ask "Why is this important?" for each item.

Step 3: Identify what’s most important for you based on your values. 

Step 4: Set goals based on your values.

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Remember, goals define the outcome or objective, while values drive the culture, ultimately shaping the behaviours or actions that lead to achieving the goal.

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How to set SMART goals?

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Let’s use Mool Chacha’s objective to work through each component

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Mool Chacha’s SMART Goal: To accumulate  25 lakhs, adjusted for inflation, within an 8 year period to cover the MBA fees at IIM Ahmedabad for his sons' education.

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1. Specific: For a goal to be impactful, it must be specific, addressing questions such as:

• What is the desired accomplishment?
• Who is accountable for it?
• What actions are necessary to attain it?

Mool Chacha: I aim to build up a substantial fund to finance my sons' MBA college fees at IIM Ahmedabad through monthly contributions.

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2. Measurable: While specificity is crucial, quantifying your goals by making them measurable facilitates tracking progress and determining when you've achieved them.

Mool Chacha: I want to accumulate 50 lakhs assuming that the current cost MBA from IIM Ahmedabad is 30 lakhs and will inflate @9% p.a. for the next 8 years. I'm able to invest 25,000 rupees monthly in a SIP

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3. Achievable: At this point, it's vital to conduct a reality check. Goals should be achievable, not lofty ideals that set you up for disappointment.

Mool Chacha: I’ll be able to achieve 40 lakhs even if my investment grows consistently at 12% p.a. I have to increase my monthly contributions every year in line with inflation at 9% to accumulate the desired corpus.

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4. Relevant: This step emphasises ensuring that your goal holds personal significance and aligns with other relevant objectives.

Mool Chacha: My sons’ education is very important and it’s the right time for me to start contributing towards my goal.

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5. Time Bound: SMART goals should have time-related parameters built in, so that one knows how to stay on track within a designated time frame.

Mool Chacha: I’ve 8 years to accumulate the education corpus

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SMART goals transform dreams into tangible realities. With clarity, determination, and a clear roadmap, financial aspirations become achievable milestones. Embrace the power of goal-setting, and watch as your journey towards financial freedom unfolds

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