How To Set Achievable Financial Goals  

By | February 8, 2019

So you wish to buy a sports car, build your dream house, and squeeze your way out of that Education Loan. Got a game plan? No? Here’s how setting financial goals can literally help you achieve all of that and much more!

In management schools, students learn a thing or two about setting SMART goals. The acronym SMART stands for:   






Although it caters broadly to businesses, SMART goals are also directly applicable in matters of personal finance.  

Wondering how?   

Let’s say, for instance, your goal is to buy a car.   

According to SMART rule, your goal would require further processing in the following way:  

Specific – What kind of car do you wish to buy?   

Measurable – What is the current market price of the car?   

Attainable – Do you have the means to buy the car you have in mind?   

Relevant – Is the car available in the market?   

Time-Based – How soon do you wish to buy it?   

A SMART goal, in this case, will be:   ‘I want to buy a top-range Sedan currently priced in the range of Rs. 18 – 25 lakhs by 2020’

With this information, you can narrow down your options, de-clutter your mind, and plan your finances in a way that makes this goal achievable. 

Why Should You Set Financial Goals?   

Imagine a life without financial planning – you would keep on wishing for things not knowing when or how they can be realised. Financial goals help you streamline your options and take actions to ensure your goals are met.  Besides, thorough planning allows you to organise your finances and get rid of the excesses that are blocking your path.

If you are starting out with plenty of dreams and little know-how of how to achieve them all, begin your journey by sorting your goals into three baskets: short-term goals, mid-term goals, long-term goals.   

Additional Reading:In Your 20s, 30s or 40s? Here’s A List Of Financial Goals For You  

Short-Term Goals   

Put only those goals here that you cannot put off till later. For instance, paying off your Education Loan. Education Loan is a liability that’s riding on your hard-earned salary and hence, the earlier you pay it off, the merrier it is. Short-term goals can also include the latest smartphone that you have been eyeing for some time.   

Once you have them sorted, figure out how soon you want them.   

If you have these two important things settled, you are almost halfway there. The next important bit – money.   

Ways To Finance Your Short-Term Goals   

There are several ways you can fund your short-term goals.   

Recurring Deposit  

The timeless saving tool stands tall even today. Although the interest rates are not lucrative, investing in a recurring deposit account is easy and safe. You can open an RD online and close it anytime you wish. If you choose to open an RD to meet your short-term goals, make sure to stay invested until you have collected your desired fund.   

Liquid Mutual Fund  

Liquid Mutual Funds invest in government bonds and securities and hence, they are considered to be one of the safest Mutual Fund options. Unlike other funds, there is no entry or exit load here, which means, you can enter and leave at your convenience. The rate of interest on liquid Mutual Funds is also quite decent which is what makes this fund a popular choice for short-term goals.    

Additional Reading: 5 Ways Women Can Build Wealth

Mid-Term Goals   

Mid-term goals bridge the gap between short-term and long-term goals. Consider putting those things in this list that you need to realise in the next 3-5 years. While making this list, take into consideration any major change that may shape your career in this space of time. Also, remember to put in things that will inspire you to stay invested or else, you may just lose interest in it.   

Ways To Finance Your Mid-Term Goals   

Consider either of the following options for your mid-term goals.   

Fixed Deposit   

Fixed Deposits are still one of the most trusted investment options for most Indians. With an interest rate ranging between 6-9%, Fixed Deposit can be a useful investment option for your mid-term goals.  


Equity Linked Savings Scheme or ELSS comes with a mandatory lock-in period of 3 years and they can prove to be extremely useful in taking your dreams a step closer to reality. You want to know why? It’s simple. Investments up to Rs 1.5 lakh are eligible for tax deductions and returns on investments are far greater than that of Fixed Deposits.   

Additional Reading: The Layman’s Guide To Investing In ELSS  

Long-Term Goals   

These goals would require a lot of planning. So, do the groundwork and think it through before you decide to lock your money away for the next 10 years or more. While investing for long-term goals, remember it’s going to take a lot of time before your investments add up to a solid figure.  

Ways To Finance Your Long-Term Goals   

Public Provident Fund (PPF)  

Owing to its enormous tax benefits, PPF is a decent choice if you are a risk-averse investor. With PPF, you can expect to get interest rates around 8.7%, but do keep in mind; it comes with a mandatory lock-in period of 15 years!

Systematic Investment Plan (SIP)   

SIPs are your best bet when it comes to long-term growth opportunities. Invest small amounts every month and watch your investments grow in the next 8-10 years. The one thing that’s unique to Mutual Funds is the power of compounding. If you stay invested for long, your investments will not only beat the general inflation rate but they will also yield returns which are great in numbers.   

As you prep up to achieve your financial goals, remember to review your goals from time to time. Goals that you had set for yourself 5 years back may no longer be relevant to you. Also, never forget to invest in yourself because it is the best investment that you can make.

Ready to begin your financial journey?   

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