Question

Please elaborate on Daniel's ideas for achieving these goals.

Daniel is 39 years old and currently serves as a business manager with 4 household members.

Short-term Financial Goals (300words)

Intermediate Financial Goals(300words)

Long Term Financial Goals (300words)

Don't write theory, write about Daniel's reality situation.

Answer 1

Hi,

Here are some of the suggestions .

Daniel’s Financial Goals:

Goals drive people to perform. They set people to work and strive towards the objective. Once the objective is met, there is a lot of satisfaction and sense of achievement.

· Short term Goals

o Short term goals are those that are for immediate requirements. Normal time lines are 1 to 6 months. These are mostly for immediate or in the very future. These expenses can be for meeting house hold expenses, payment of school fee, rent, utility payments like internet, phone, electricity, Gas, expenses paid for services of a maid, repayment of student loan, personal loan, making insurance payment, Credit card payments, creating an emergency fund, Travel expenses, gift towards birthday or wedding, minor maintenance expenses at home.

o Action Plan. Estimate the net take home pay (after all deductions and taxes) let’s say is $9000 per month

Has 4 dependents.: Lets assume that he pay’s Rent $ 2000. Monthly provisions $1000, Gas $50, Internet $60, School Fee $150,(assuming 1 School going kid),$75 towards medical expenses of his dad, Phone$60, Electricity $125, Maid $200, student loan $300, Insurance $ 150/- Credit card $1500, Emergency fund $500, Travel $200, Gifts $250 Minor repairs provision $300, Entertainment expenses $ 400 and another $280 for misce.expensesTotal Expenses let’s say is $7600/- He can save $1400.per month . That is a $ 16800 per year.

He has to track his budget on a daily basis to begin with. The habit of savings to be followed by all in the family. Sometimes there is an urge to go out for shopping during the weekends. His budget is $ 100/- only for the week. However, there is a discount of 60% by Kohl’s and he is tempted to by and spends $ 300.. He has to curb the habit of going out for shopping for next 4 weeks so that he will not overspend.

Infact, short term goals are very difficult to meet, as unforeseen expenses crop up. Discipline and dedication are the key to achieving these. Once you start achieving them, you can easily achieve the intermediate and long-term goals.

One way to achieve the short-term goals is to keep aside the expenses budgeted in a separate envelope, and take it from them and keep a list of expenditure of that item in that envelope. This way it helps to curb additional expenses.

· Intermediate Goals:

Intermediate goals are also known as medium term goals. These are in the range of 6 months to 3 years. Examples of Intermediate goals for Daniel could be ..

o Planning for a vacation, Car down payment, Plan for School/College funding of child,

o Owning a Car, Home down payment, Invest in stocks,

o Own a yacht, a Fancy Motorbike, Invest in a farm house..

Daniel can start saving in Recurring Deposit of a Bank, invest in Mutual Funds, and invest in SIPs(Systematic Investment Plan) of Gold Bonds,.. A budget need to be prepared for the school/college expenses plus cushion over and above the estimate, as we never know how inflation and added funds push up the expenses.

The savings in Short term goal planning would come in handy, though not fully, at least to 75 to 80% as some emergency expenses crop up in short term goals expenses.

Added to the savings, Daniel can also set aside, his increments, Bonuses and additional income through commission/dividend and other investments if he has any to meet some of the medium-term goals. He can think about investing in Certificate of Deposits of Banks which offer higher interest rates.

Long term Goals:

Long term goals have a horizon of 5 to 20 years. These goals could be

o Retirement Planning

o Wedding of your daughter or son

o Pay off the mortgage

o Setting up a small business

o Medical expenses after retirement

o Travel on a long journey

o Job loss/accidents/broken appliances/car repairs/Home repairs

To achieve the long-term goals, Daniel needs to adopt the following:

1) Do not have more than one Credit card

2) Pay off small loans through savings/borrow at low cost/transfer loan to other who offer long term loan at cheap interest

3) Plan well-Have the long-term goals displayed at your home prominently and strive towards it.

4) Build additional emergency fund.

5) Cut on lavish expenses be it entertainment, food, travel, drink, Gifts, buying expensive clothing, Spending too much on shopping on fancy items.

6) Start investing in a systematic manner. Assume that you get $ 1000 less and set this as a saving ..

7) Take up another business apart from job during your leisure hours. Like Coaching/sell insurance policy

8) Pay cash instead of taking a loan or use credit card.

9) Invest in A+ stocks and watch them perform and grow.

10) Invest in real estate. at a small cost like buy a small piece of land. Invest in gold. Invest in Silver. These would turn out to be a big harvest in 10 to 15 years.

Thus, by systematic planning and disciplined living, Daniel can achieve all the 3 goals. Short, intermediate and Long-term goals…

All the best.