From Dreams to Done

Because dreams are easier to achieve when you give them a number, a timeline and a plan.

Author - Mahendra Rao CWM, QPFP

We all have dreams. Some are big enough to change our lives. Others are small enough to fit into a weekend. But the feeling of achieving them is almost always the same — I did it. 

How does it feel when you achieve a small dream or a goal, it can be climbing a particular mountain peak, learn a new skill or even going to that dream vacation, 

That feeling is beyond imagination. Be it a personal or professional dream or goal.A few days ago, I found myself thinking about a conversation I had with a client. It made me realise how often we have dreams but don't know how to turn them into financial goals.

So, let me share that conversation with you.

Mahendra : Hey Priya, Good to meet you. I got your reference from Ms Angela. I understand you're looking for some help organising your finances.

Priya : Yes Mahendra, I am looking out to sort all my finances. I have been working for the last three years since I was 24 but I am not able to save anything yet. Angela told me you're a personal finance professional and that you help people organise their finances.

Mahendra : Yes, that's what I do. I help individuals and families bring structure to their finances, plan for their goals and build long-term wealth. 

Priya : That sounds great Mahendra.

First let me brief you about the things I have in my mind before it skips my mind and what I want to achieve.

Currently I am 27, I started working when I was 24 years old. I am working as a social media account manager. Earlier I was doing an internship then I started doing freelancing . The income was unstable then. So my finances were all haywire. Now that I have a decent job with a fixed salary and some money coming in from my freelancing job that I still do, now I want you to help me sort out my finances. There are various goals that I want to achieve and also create a good amount of wealth for myself. Mahendra: "What would you like to accomplish in the next few years?"

Priya: "I definitely want to travel every year..."

Mahendra: "Anything else?"

Priya: "I want to buy jewelery for my wedding..."

Mahendra: "And beyond that?"

Priya: "A house. And I want to build wealth.

"Oh! And I forgot something..."

Laptop.I also want to buy a cool laptop for my office work to enhance my productivity.

Mahendra : "That's a good starting point. Most people don't even take the time to put their goals into words."

Priya : I too didn't have so much clarity, but Angela precisely asked me to be prepared with such things as you will be asking me such questions. So I prepared everything 

Mahendra :  Good to hear that now you have a good job and steady income we can start planning for your future goals.

Before we start, I would now like to know your monthly budget so that I can understand your income and more of your spending habits.

Income		Expenses
Salary ( in hand )	₹ 120,000	Rent	₹ 25,000
Freelancing Income		Travelling (Office & meetings )	₹ 10,000
Client 1	₹ 35,000	Maid	₹ 3 000
Client 2	₹ 18,000	Groceries	₹ 7,000
		Shopping	₹ 5,000
		Parents	₹ 10,000
		Phone EMI	₹ 3,500
Total	₹ 173,000		₹ 63.500
Monthly Surplus		₹ 109,500

( This figures were arrived at after a lot of probing by asking all the silly questions so that all the expenses are covered ) 

Great to understand your income and spending. Also to understand more you don't have any savings as of now, few balance in savings account that’s it.

Priya : Correct Mahendra!

Mahendra : So, let me chalk out a plan for you. We don't have an emergency fund, so we have to create one,( The purpose of emergency funds is to protect against emergencies without forcing you to borrow or redeem long term investments)  we have to save for electronic gadgets. annual vacation, jewellery for weddings, dream homes and wealth creation. So, we need to plan for six different goals and need to achieve them one by one.

Goal	Purpose	Name	Time Frame	Goal Age
Goal No 1	Emergency Fund	Emergency Fund	Built until entire corpus is reached	30 year
Goal No 2	Budget for Electronics Gadget	Laptop Fund	Within 1 to 2 yr	29 year
Goal No 3	Annual Vacation	Vacation Fund	Every Year	N/A
Goal No 4	Jewellery for Marriage	Wedding Fund	Within 3 to 4 yr	30 year
Goal No 5	Buying a house	Home Fund	Within 7-8 year	35 year
Goal No 6	Wealth Creation	Wealth Creation	Within 15- 20 yr	45 - 50 year

So, Priya, what we have done here is we have created a kitty or a piggy bank for each goal. Instead of putting all your money into one big bucket, we gave every goal its own bucket.Now that we know each goal and also the time frame we can allocate the amount to each specific goal.

We weren't just listing dreams. We were converting each dream into a SMART goal — something specific, measurable, achievable, realistic and time-bound.

If you look closely, we have built a great foundation of your finances before focussing just on wealth creation. 

“Before building wealth, build the foundation that protects it.”

We have created this goal's basis priority starting with an emergency fund, planning for your tech gadget, saving for your annual vacation, along with a plan for your dream wedding jewelery, your dream home and wealth creations.

So, now let's assign the amount and specific funds and allocation to each fund.

Goal Name	Amount	Target Funds
Emergency Fund	₹ 10,000	Liquid Funds
Laptop Fund	₹ 10,000	Ultra Short Term Funds
Vacation Fund	₹ 15,000	Liquid Funds
Wedding Fund	₹ 15,000	Gold ETF
Home Fund	₹ 25,000	Diversified Equity MFs
Wealth Creation	₹ 25,000	Equity Flexi Cap, Mid and Small Cap funds
Total	₹ 100,000

Mahendra : So, Priya, we have now created an allocation of all the funds goal wise. ₹ 9,500 we have kept as a buffer which will be there in the savings account. Once the emergency fund reaches its required level, the ₹10,000 monthly allocation doesn't disappear. It gets redirected towards the longer-term goals.

In due course we have to keep monitoring and reviewing the same on a timely basis.This is how your financial goal plans can be achieved.

There was one more piece of the puzzle. A financial plan isn't complete if one unexpected medical emergency can wipe out years of savings. Before I conclude I feel you need to enhance your health insurance cover and take it to ₹ 10 lakh at least. Also it is recommended to buy a term insurance plan as the premium will be quite low at this younger age.

Priya : This looks amazing but will I be able to achieve so much?

Mahendra : You don't have to achieve everything today. You just need to start with the first goal, give it a number, give it a timeline and stay consistent.

Priya: This sounds amazing Mahendra. I am quite eager to start this as early as possible. Let's get on with the documentation.

This was a small conversational story about a candid meeting I had with one of my clients. I have changed the names but the planning and story is real. The client has been able to create a good amount of corpus till date and two goals are already achieved by the time I am writing this blog.

Happy to bring smiles to individuals and families by helping them achieve their financial dreams.

#HappyInvesting