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Three goal setting mistakes you need to avoid

The start of a new financial year is a time to look forward to salary hikes and, even promotions. This is, actually, a good excuse to review and recharge your financial goals. While planning and goal setting are essential to managing your investments, but they need to be thought through.

The start of a new financial year is a time to look forward to salary hikes and, even promotions. This is, actually, a good excuse to review and recharge your financial goals. While planning and goal setting are essential to managing your investments, but they need to be thought through. Mistakes made in the planning phase can result in you not being convinced about following through with the investment plan. Ultimately, poorly set goals and plans can defeat the very purpose for which you began investing. 

To make sure you follow through with your plan and achieve your financial objectives avoid these three mistakes:

1. Being over ambitious 

Don’t set unachievable financial objectives simply because you are undergoing a formal financial planning process. For example, you may want to buy a house in three years at a value of say Rs 2 crore.

Before setting this as a target objective, you have to see whether your current salary and saving capability is enough to achieve it. You may have to lower your target if the above variables are insufficient to match your goal. Secondly, savings are usually limited, so the number of goals you can cater to will have to be within that limitation.

As one or two get achieved you can add more. Don’t take on too many goals right at the start, you may be disappointed at the end if some of them remain incomplete because of a funding constraint. Another aspect is to keep a reasonable return target rather than aiming to double your money in a short period.

Try to balance goals between your desires and necessary financial objectives. That way you will be able to enjoy life and invest for your future, at the same time.

2. Catering only to the wants

A destination wedding or buying a car does need planning, however, make sure that wants and desires do not take up your entire goal sheet. You must also cater to important needs like retirement, children’s education and so on.

Try to balance goals between your desires and necessary financial objectives. That way you will be able to enjoy life and invest for your future, at the same time.

3. Not taking action or executing

 Goal setting makes you aware of your future financial objectives. Once that is done you can allocate amounts to financial investments like mutual funds to achieve these goals. Even before you begin though, ensure that you are saving enough to make these investments.

You may even have to cut back on some non-critical expenses to increase your savings so that you can invest gainfully for the future. Executing your plan is easier said than done, but it is necessary that you begin by executing it in entirety rather than pick and choose the parts which are easy to follow through.

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