How to Map Savings to Goals?

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Categorise your financial goals

Rajashri was up for a promotion. She felt the thrill of a pay raise. With more money comes more responsibility. Although she’d been saving for the last two years, she had no idea what she was saving for. In fact, it had become so mechanical that she didn’t know why she was doing it. So, she decided to list out her financial goals and categorise them.

Rajashri loved travelling, her trips for 2020 had been cancelled on account of travel restrictions. She was really looking forward to a vacation at the next opportunity. She had some outstanding credit card debt. Rajashri vowed never to let credit card dues pile up. She also treated herself to a piece of jewellery every year around Diwali. She wanted to settle down in the next five or six years. This meant getting married, buying a house, and upgrading her car. In the long run, she wanted to buy a second house and start her own consulting firm. She also wanted to be able to retire in her early fifties.

Short-term financial goals

Short-term financial goals are those you expect to achieve within five years. In Rajashri’s case, her short-term goals were:

  1. Travelling
  2. Settling Credit Card Debt
  3. Buying Jewellery
Medium-term financial goals

Medium-term goals are those you aim to achieve in the next five to ten years. Rajashri’s medium-term goals included:

  1. Getting Married
  2. Buying A House
  3. Replacing her car
Long-term financial goals

Long-term financial goals are at least a decade away. Typically, retirement falls into this category. Rajashri’s long-term goals were:

  1. Starting her consultancy firm
  2. Retiring early
  3. Investing in a second house

Prioritize your Financial Goals

Rajashri had nearly ten financial goals to plan for. This is how she prioritised her goals:

Priority Description
Low Priority Nice to haves, could do without them
Medium Priority Flexible on timeline but important to achieve
High Priority Important and fixed timelines

 

Financial Goal Matrix

After she categorised and prioritised her goals, Rajashri came up with a financial goal matrix.

Priority Short-Term Medium-Term Long-Term
Low Priority Buying Jewellery Replacing Car House as an Investment
Medium Priority Going on a Vacation Getting Married Starting a Business
High Priority Closing Credit Card Debt Buying a House Retirement

This helped her identify the right savings and investments to achieve her goals.

Map your savings to your goals with an ithoughtwealth goal-based investment.

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