What Is the Significance of Goal-Based Financial Planning?

It’s a well-known fact that our generation earns lesser than the previous generation. In such dire times of economic volatility, how does one beat a whole economic and financial system that curtails the creation of personal wealth in relative terms? Simple, one swims with the flow and not against it!

This means that you must ace the art of goal based financial planning, for which you require the skills of financial literacy and money management. But most importantly, you need the vision of goal setting. Because, without a clear financial goal, your investment efforts will be gone for nought.

What is goal-based financial planning?

Think of this concept as working backwards from an end target. Say you had a deadline; you’d typically work backwards from there and set appropriate milestones to achieve your targets. Similarly, you set a financial goal that reflects your personal targets of wealth creation- right from saving for education to buying a house, planning your retirement, etc. Based on this goal, you make informed investment decisions that help you inch closer towards your objectives and successively achieve every milestone you set for yourself.

What is its significance?

Just like an organisation is lost without its expected goals, your investment efforts are fruitless and misdirected without a specific goal. For instance, having a goal of saving taxes will not only narrow down your options but also help you gain more benefits from your efforts. In the same spirit, the practice of goal-based financial planning done with the right personal financial planning tools has the following benefits:

1. You can save more. When you are aware of the goal you are saving and investing for, budgeting for your expenses becomes a lot more efficient. You can also follow the 50-30-20 rule, where 50% of your income goes to needs, 30% to wants, and 20% to savings.

2. You will consciously focus on minimizing risks by investing in a disciplined manner to work towards your financial goals. This will cut down on a lot of impulsive financial decisions.

3. You can systematically plan your taxes. With a certain financial goal looming over your head, you will be motivated to invest in tax-saving instruments that maximise your earning potential.

4. You will be able to financially secure your future on a budget! The peace of mind and assurance that comes with it are unparalleled.

How can we help you?

Tailwind is a digital wealth management platform that understands you and your financial goals. In fact, our platformis designed to process your goals and suggest investment options that best suit their trajectories. All you have to do is put in your goals and let us do the work. Our team of expert wealth managers are prepared to help you chalk out the best possible route to operationalise goal-based financial planning.


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