How do I set my financial goals

These goals can help you succeed in your personal and professional life and save for retirement

By Dhaval Jasani/money matters

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Published: Mon 10 Jul 2023, 4:16 PM

Last updated: Mon 10 Jul 2023, 4:17 PM

We are a small family with two young kids. I have heard of financial goals. How do I set my goal?

This is a modest start in your journey of financial freedom while you your family aim to live a comfortable life that is within your reach and resources. Financial goals can be short-term, medium-term, or long-term. These goals can help you succeed in your personal and professional life and save for retirement. Examples of financial goals include creating an emergency savings account, building a retirement fund, paying off debt, owning a dwelling for you and your family and so on.

From a long-term perspective, you visualise requirement of funds to cater to objectives including but not limited to emergency corpus for contingency, fund requirement for your children’s education, funds required for retirement life and assets including your dwelling that you endeavour to own for you and your family. Once you have listed these obligations and estimated amount required against each obligation, you derive the overall sum, that becomes your financial goal for you to achieve while you continue to have a steady flow of monthly income pursuing your career. Then comes the next step of setting aside part of savings from your monthly earnings to cater to these requirements gradually in the order of priority, first being the emergency corpus to the extent of six months of your monthly expenses. Emergency funds would cater to any emergency needs when you would require funds to be at your disposal while the rest of the obligations could be tied up to suitable investment instruments that you may choose and start contributing once you have built up emergency fund corpus. Several pension plans and children education plans are available in UAE and overseas and you may choose suitable plan(s) depending upon the benefits offered that meet your requirements. Intention is to have a steady flow of monthly income during your retirement that is generated from the amount invested over the years in pension plan(s) while the principal amount invested remains protected and lump sum payment to cater to higher education expenses of your children in future. While choosing such pension plans, please take cognisance of the inherent risks involved when the principal amount is being invested in global markets. Investment in equities and other instruments being traded in the markets carry a certain amount of risk.

Do not rush to choose these plans while you allocate funds cautiously, keeping in view the availability of funds at your end. Intention is to allocate part of the savings available at your disposal to meet future requirements while you continue to lead a life of comfort that you desire. Ideal method to deal with such obligation is to prepare monthly budgets considering funds available at your disposal and allocating funds for your living expenses, discretionary expenses and other payments leaving the balance amount at your disposal as savings.

Do spend time at periodic intervals to review these figures from time to time and revise them depending on the circumstances prevailing from time to time.

If you are the sole earning member in the family, you may also wish to sign up for life insurance, nominating your spouse as the beneficiary, to safeguard their interests in case of any eventuality.

Ultimately, it is for you to set your own goals and achieve them. We wish you the very best for your endeavours while you embark on journey of financial freedom.

The writer is founder and CEO of ZTI Global.