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How to Set Financial Goals in 2022: 6 Simple Steps With Tips & Examples

Investment planning is no easy feat. It takes considerable research, simulations, and calculations to arrive at a plan that meets your financial goals. Here’s how to start.

Financial goals are the big-picture objectives you might set to make money or even just save money. They’re often personal and exclusive to your circumstances.

Regardless of their nature though, early identification of financial goals is critical. After all, they can play a massive role in determining your future and financial capabilities.

Here’s a step by step guide on how to plan your financial investments to meet goals:

What are Financial Goals?

Financial goals are the long-term objectives you set for yourself regarding how you'll save and spend money. They can be goals you want to reach soon or in the future. In either case, identifying your objectives ahead of time makes it much easier to achieve them. 

Relation Between Financial Goals And Budget

Creating and sticking to a reasonable budget is a worthwhile financial objective in and of itself. However, you'll struggle to fulfil your objectives if you don't have a budget.

Budgeting abilities are essential for effective money management and financial planning. This is because your financial goals are part of your total financial plan, and your budget allows you to analyse and alter your plan as necessary to meet your objectives.

You can use your budget to examine your financial achievements and failures and identify any areas of your plan that may need to be altered, just way professional athletes keep thorough records of their workouts and victories to gain perspective and track their growth. Your budget will also give you a sense of control over your finances and the determination to continue in the face of financial hardship.

Types Of Financial Goals

Depending on the time frame, financial goals are divided into three categories:

  • Long-Term Goals: Long-term goals, such as assuring financial security in retirement or paying off your home, are a ways off. Short-term or mid-term financial goals are frequently included in your long-term financial goals. Breaking down enormous goals into smaller, more urgent ones is always a bright idea.
  • Mid-Term Goals: Mid-term or intermediate goals could include things like saving the premium payment for an annuity that will pay you for the rest of your life, boosting your credit score, or obtaining the funds to start your own business.

You could wish to look into passive income opportunities or engage a financial counsellor to assist you in planning your retirement. These examples of mid-term financial goals are three to ten years in duration and serve as a stepping stone to a greater goal.

  • Short-Term Goals: You could wish to set short-term objectives for things you'd like to purchase shortly, in addition to smaller, more narrowly focused goals that contribute to your long-term goals.

#1 Assess the reasons why you need to create wealth

The first step when planning investments is to identify the underlying factors that drive you to do so. These inherent and important reasons why you need to create wealth can revolve around several factors, such as:

  • Goals: Goals can vary from person to person, ranging from building wealth to buying a house, car, vacation, funding your child’s education, starting a business.

Before you invest, these goals should be clear and apparent. Leave minimal room for ambiguity when you state the reasons why you need to create more wealth.

  • Retirement: If you’re more than a decade or two away from retirement, you might not be convinced that you need to start saving yet because your money is better spent elsewhere.

Hate to burst that bubble, but experts believe that you will need about 70% of the amount you make at the peak of your career to maintain the same standard of living post-retirement. Clearly, it’s critical that you save for it since fewer employers are offering pensions and contributing to retirement savings.

In addition - the trick to investing is not investing right, but investing early. Due to compounding - the money you invest today takes 10-15 years to start multiplying every year.

  • Inflation: In simple terms, inflation refers to a general increase in prices and a fall in the purchasing value of money. For investors, inflation can be the biggest enemy. It is a direct consequence of inflation that people are compelled to not hoard money but invest. Inflation affects everyone’s basic cost of living, and the rate of inflation will only go up in the future.

Money stuck in a bank account makes one poorer every year (due to inflation) and equity is the only asset class that has the capacity to do better than inflation. So the real reason to invest is not to maximize returns but to beat inflation.

For example, using this inflation calculator, we see that Rs 100 from 2001 would be worth Rs 342 today. That’s a 242% increase in 20 years, significantly eating into the value of investments that may have appreciated since then!

#2 Identify goals

“I made my first investment at the age of eleven. I was wasting my life until then.” This statement by Warren Buffet sums up to a great extent, why early identification of investment goals is key to making good and sustainable returns.

  • One of the golden rules of goal identification is to do it as early as possible. The earlier it is done, the better the results. This includes making a list of goals and listing estimated spending on each while taking into account inflation, which is fairly high in India.
  • For goals revolving around foreign travel or education, make sure you take into account the rise of foreign currencies since they have been increasing consistently.

Goal identification gives you an edge simply because you have a wider and superior choice of investment alternatives, and aligns you better towards financial goal planning.

#3 Risk identification

Equity is important for long term goals, that is, goals that span more than 3 years. For them, you must identify the various risks that come into play. Knowing how much risk you can take is a big part of actually achieving them.

Some build 100% equity portfolios, as it allocates all invest-able funds solely to stocks. However, there are several drawbacks to doing this. This strategy provides very little or no protection against some threats to long-term investments: risk and volatility.

Since many investors do not have the appetite to deal with volatility, this might not work in their favour. We suggest taking this risk tolerance survey to understand your risk profile better.

#4 Select asset classes

Asset classes are types of investments that exhibit similar characteristics and are subject to the same laws and regulations. Financial advisors often focus on these asset classes as a way to help us with portfolio diversification.

  • For simple goals, we recommend a mix of debt and equity. However, this can vary based on your risk profile.
  • Investors must also consider portfolio rebalancing, which safeguards them from being overly exposed to undesired risks by changing their portfolio makeup. Rebalancing also ensures that portfolio exposure remains within the manager’s expertise.

#5 Decide long-term goals

Long-term goals require non-stagnant investments. These include using multiple asset classes which may involve equity, gold, debts, etc. Asset allocation becomes crucial here as it helps in balancing and reducing risk. It is an investment portfolio technique that divides assets into major categories such as stocks, bonds and real estate. Deciding on long term goals will help you pick the right mix for your investments.

#6 For your equity allocation - consider Index Funds

Any robust investment portfolio involves diversification. Spreading funds across various asset classes can minimize risks - a desirable portfolio characteristic for any reasonable investor. This is where index funds come into the picture.

  • Index funds invest in stocks that imitate a stock market index, like BSE Sensex and NSE Nifty. These funds are passively managed, and the fund manager invests in the same securities, in the same proportion, as the underlying index they track.
  • As you can guess, this makes index funds a reasonably low-cost solution with lower risks in a market where beating the benchmark is becoming increasingly challenging.
  • Index funds can be easy to pick, and their low cost makes them ideal for long term goals. They can play a crucial role in building wealth as they are low risk and follow a market, which increases your chances of growing this wealth every year.

Examples of Financial Goals

As you begin to develop goals, consider what's essential to you. It's very natural to have multiple objectives and shift over time.

The following are some examples of financial objectives:

  • Debt repayment
  • Putting money aside for retirement.
  • Putting money aside for an emergency.
  • Purchasing a home.
  • Putting money aside for a vacation.
  • Starting a company.
  • Feeling safe about your finances.

Benefits Of Setting Financial Goals & Why They Matter

Life objectives help your life by providing focus, motivation, and confidence. However, when you incorporate specific financial goals in your life plan, you are setting yourself up for success in multiple aspects of your life. Setting financial objectives is integral to achieving success, stability, and security. Setting financial objectives has several advantages:

  • You may make a financial strategy that works for you.
  • You have the option of selecting acceptable strategies.
  • You can keep track of your progress.
  • You are more motivated and committed since you know what your priorities are.
  • You improve your chances of getting positive results.
  • You establish a system of built-in accountability.
  • Your financial mindset improves.
  • You are optimistic about the future.

Tips For Setting Achievable Financial Goals

Your financial objectives are one-of-a-kind. They're an extension of your core values, of what matters most to you. Some objectives may be more straightforward to fulfil than others. We have listed down some of the tips to help you throughout in achieving your financial goals:

  • Create a mental image of your ideal life and set financial goals that correspond to it.
  • Give your objectives names that are exciting and motivating.
  • Set a deadline for yourself
  • Make graphic representations of your goals to help you visualise them.
  • Make your success automatic.

Resources For Setting And Reaching Financial Goals

You have resources for practically every type of financial objective at your fingertips, from direct deposits to savings accounts and autopay choices for credit cards to budgeting programmes that link to your accounts and update in real-time.

Some are free, while others require a subscription, and the features and advantages differ. You'll need to assess these resources against your goals to see if the benefit outweighs the expense or, more crucially, the time it will take to set them up and learn how to utilise them.

Like any other tool, these software apps can't accomplish everything for you. To ensure that everything is working as expected, you'll need to keep track of your transactions and accounts and be mindful of app settings and notifications.


Investment planning is no easy feat. It takes considerable research, simulations, calculations, and more to arrive at an investment plan that meets your financial goals. And of course, actual investing continues to require strategy and experience.

For wealth creation to meet your financial goals, start early, start now, and start with Glide Invest, while realistically defining your financial goals.


Q1: What is the definition of a financial goal?

A1: Long-term, short-term, and intermediate financial goals are the building blocks of a comprehensive financial strategy. Financial objectives are defined and measurable milestones that, when achieved, get you closer to your ideal future. They are not to be mistaken with a budget or financial plan.

Q2: Why is it vital to have financial goals?

A2: Setting financial objectives allows you to track your progress and determine if you're on track or not. The outcomes you encounter while taking the steps necessary to achieve your objectives might provide you with perspective and insight. In addition, they help you figure out what works and what needs to be tweaked.

Q3: What is the most crucial phase in the financial planning process?

A3: Keep an eye on your financial situation. The need for regular communication and follow-up in the financial planning process cannot be overstated. Devising a strategy is only the first step. After that, you'll keep in touch with your planner to see if you're on track to reach your financial objectives.

Q4: What are the most critical aspects of effective financial planning and budgeting?

A4: Sales forecasting, spending outlay, a statement of financial status, cash flow projection, break-even analysis, and an operations plan are often included in a thorough financial plan.

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