Don’t just Save, Allocate a goal for your savings

The primary focus of financial planning is to meet one’s goals in life. These goals could be long-term or short-term in nature. 

It is imperative to bear in mind that while we are saving towards our goals, what we are planning is also meant to be enjoyed by us. 

Here are a few things to consider while trying to allocate a goal for your savings:

1. Prepare a buffer to take care of all your expenses for at least the next six months in case of an emergency. Take the current situation, for instance. Due to the global pandemic, millions of people have lost their jobs and everything that once was predictable does not seem so sure anymore. Keeping in mind all of your immediate expenses, it is important to carefully prepare a buffer that you must only touch in case of an emergency. 

1. Identify long-term goals and short-term goals and what works best for you. Goals, whether long term or short-term must be –
   1. Specific;
   2. Measurable;
   3. Attainable; 
   4. Relevant; and
   5. Time-bound

While taking all of the above into account, you must be able to easily identify which of your goals can be achieved over a period of time and the goals that would require more planning and time.

1. Identify the finances/time it would take you to reach your goal. Be practical with yourself. It is unrealistic to build and chase after goals based on hypotheticals. Put in the groundwork and know for certain, exactly what percentage of your income you should be saving each month for you to be able to live your best life, and at the same time be able to keep yourself well-protected. 

1. Choose carefully between various options to invest your money in a plan that works best for your needs. You can choose between various alternatives like mutual funds, bonds, NSCs, deposits and other policies.

1. Leave scope for realignment. At any given point in time, circumstances may change and stop being favourable. Your planning should leave room for such situations and must be flexible enough to not be overwhelming for you.

1. Keep in mind inflation and deflation. Inflation and deflation of prices over time, especially in the case of long term goals must be carefully considered before investing. 

  Having adequately considered all of the above, your next steps must be to find a smart and responsible method of investing your savings. It is futile to squirrel away all that you have worked for in hopes of passing it on to the next generation, or holding on to it until you finally retire because you will be too old to enjoy any of it. Although it may be the wise thing to want to try to curb financial risk, one must also come to terms with the fact that life is unpredictable. Invest in plans that will have your back in the future. We must understand  that we do not need  to live frugally as long as we can  balance between being too easy on our purses and holding the strings too tight.

 Therefore, saving and using your savings towards things that add value to your life is equally as important as each other and must go hand-in-hand for you to enjoy life today as well as secure your future.