What to do if you go off track on your financial goals

Since financial markets are volatile, you have to assess if you are on track towards your financial goals. A few small tweaks can help you stay on track, when things appear off track.

July 29, 2022 / 02:41 PM IST

Many people invest and save to become homeowners, or to buy that new car, or to send their children to a great college. These financial goals are some of the most challenging in life and require enormous planning, and evaluation, re-evaluation and monitoring to ensure they are on track and will provide the returns you need on time.

But what happens if you go off track?

By its very nature, the investment market is highly volatile and unpredictable, which necessitates constant reassessment so that you are on the ball. Going off track does not mean your money is lost; since the nature of the market is uncertain, there are many corrective steps that you can take to protect your money.

Here are some steps you can consider when it comes to take another look at your financial planning strategy:

Time adds value

If you are saving up for a trip to the Bahamas or to buy a new car, you can always put it off for a few years. These are goals that can be deferred. But that is not the case with some others, for instance, your child’s higher education. This is an unavoidable financial necessity that you need to stay on top of. If needed, you must tap other opportunities and means to achieve this end.

Downsize your goal

Downsizing your financial goal helps you achieve your targets and maintain a good budget. There is no shame in adjusting your aspirations based on affordability; it can help you immensely in the long term and helps you manage all your needs at once. For instance, if you had planned to send your child to an expensive college but are falling short of funds, the best course of action is to change the college to remain financially secure.

Increase your investments

There are times when the markets can be brutal on your corpus. To ensure your financial goals do not suffer, you must constantly review your investments and consider raising them with the help of professional financial planners, which can help you minimise risk and get back on track. Many advisors recommend a lump-sum investment to re-balance your portfolio. This works only if you are looking at long-term investments. Consider this: it is likely that the market volatility eroded your wealth over 2021 and 2022. To counter this, you can increase your investment by a lump-sum amount if you have over five years to meet the goal.

Alternative solutions

Looking for alternatives is a good way to bridge the gap between your saving ability and the goal. For instance, if you know that you need to put Rs 10,000 a month into a systematic investment plan (SIP) to meet your child’s education expenses, based on the preferred college and course, but can only spare Rs 7,500 every month. This gap of Rs. 2,500 can be a setback but you could consider an education loan to meet the expense and stay in the game.

Increase your savings

Increasing your savings amount is the best way to remain on track. As your income increases, your savings amount should go up as well. If you are saving up for a long-term goal like buying a house, you can reach this goal faster by, for example, using a step-up SIP. This step-up option lets you raise how much you contribute every month by a fixed amount that you decide on. This is a great tool to help you stay on track and helps you avoid future losses.

While you can adopt the above methods to move in a more focused manner towards your goals, you can also consider getting expert advice. SEBI-registered financial advisors are skilled at helping you understand how to address your unique financial needs with the right and smartest solutions.
Eela Dubey is a co-founder at EduFund
first published: Jul 27, 2022 07:59 am
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