When you are ready to create your financial plan, the first step you must take is to figure out what you want from your money. In this process, something we often forget is that our hearts are as important as our heads, and our feelings are as valid as our facts.

When we sit down to create our financial plans, whether we have had a sudden windfall of money or not, we still have the opportunity to decide if we need to make not just financial changes, but personal ones as well. Any form of planning, especially financial, is a chance for you to step back and take a look at yourself, who you are, what you have become or achieved, and where you want to be, financially, personally and emotionally. There are four simple steps to establish your goals. They are as follows:

1. Make a wish list and know your dreams: This list will include the things we are deeply passionate about. It’s not about the money involved; it’s about the pleasure derived. If you want to possess a villa in Spain, or own a fleet of powerful bikes, put it on the list. Some questions you can ask yourself, to know what your wish list will comprise of, are as follows:

What would I be doing right now if I had no constrains, where would I be?

What have I always wanted to do but never had the chance? This gives us our dream picture

2. Reality Check: It’s a platform to understand that we can do anything but not everything, so while we may have a huge wish list, we must know our optimum expectation from ourselves with regard to money, risk levels, asset preferences, traveling requirement, family values, financial security and so on. This dream picture needs to be aligned with your other goals and related factors.

While it is difficult to create an accurate financial plan without knowing the limitations of your money, it is equally difficult to know the potential of your money when you have just received a large sum of it. Your reality check will determine whether you can afford to quit working tomorrow, and will determine the long-term projections you need to make. It is sometimes essential to take the professional help of your financial advisor here when there are lot of choices and opportunities at your side.

3. Prioritize your goals: The next thing that needs to be done is to prioritize the list. It can be divided into your needs and your wants. It can then be segmented within these sections also, in terms of those goals that are viable in line with your current reality. Keep in mind that if your desire to fulfill your goal is strong enough, then even if you have to wait a while, you’ll be able to adjust. It is often only the perceived financial limitations that keep our dreams from becoming realities.

4. Set time frames for the goals: In this step we also segregate these goals into short, medium and long-term groups with specific time periods. This is very important to know when we want to achieve our goals. This also helps in selecting and mobilizing the funds in the optimum manner.

The author, Zankhana Shah is a certified financial planner. She can be reached at info@moneycareplanner.com.  

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