Have you ever found yourself reaching for sweets after a long day or indulging in an extra slice of cake on a special occasion? We all have. While those on strict diets may feel guilty about such cravings, it’s important to remember that occasional indulgence is normal. Just as it takes time and effort to build dietary discipline, the same applies to managing your finances.
Financial discipline involves sticking to your spending, saving, and investing plans to meet your monetary goals. It’s challenging to follow these plans perfectly from the start; instead, discipline develops through small, consistent steps over time. Remember to reward yourself for achieving financial milestones, much like having a ‘cheat day’ in dieting. Treat yourself to a small spending spree or a weekend getaway when you reach a goal—this will motivate you to strive for the next one.
Like the sound of that? Here are some more tips to create and execute your financial goals.
This is the first and most important tip. Be it money or calories, setting lofty goals at the beginning can get in the way of achieving your targets. For instance, a plan to drastically cut the intake of calories to achieve your weight goals can cause you to give up midway. Similarly, an extremely tight budget from day one can shake your resolve and may even result in unnecessary splurges.
Therefore, starting your financial journey by setting realistic goals is always advisable. If you are a person who buys branded clothes every weekend, reduce it to once a month. If you are new to saving money, start by setting aside small amounts of your salary for a mutual fund or an SIP.
The point is to set a smaller target. Once you achieve it, you will be motivated and challenge yourself with bigger targets.
Once you have established your financial goals, staying committed and maintaining consistency is essential. Rather than making hefty one-time investments, consider regular contributions to your investment strategy. One of the simplest ways to do this is through a Systematic Investment Plan (SIP) in a mutual fund.
Many mutual funds offer a minimum SIP investment of just ₹500, allowing you to start small while building your investment over time. The automated nature of SIP debits encourages you to stay disciplined, effectively reinforcing your commitment to your long-term financial objectives.
If you start early and stay consistent, you can harness the power of compounding. This allows you to get more out of your investments and easily realise your financial goals. Let’s look at how the power of compounding works through an example.
Say you invest ₹1,00,000 today; it will amount to ₹2,15,000 after 10 years at an assumed rate of return of 8% p.a. But if you had invested the same amount 10 years earlier, your corpus would have grown to over ₹4,60,000, assuming you do not withdraw during the period. *
Therefore, financial goal management is not all hard work and discipline. If you start early, you can make your money work for you!
Just as cheat days or treat days in a diet plan make people feel better and stay motivated, reward yourself when you reach milestones along your financial journey. Celebrate with a new pair of shoes or a weekend getaway. But do remember, people on a diet indulge in their favourite foods mindfully. Similarly, find ways to spend within your means.
Financial discipline is sticking to the plan, tweaking it as you progress and being nice to yourself. If you have stayed on course and achieved certain milestones, spoil yourself a little. Your mind will get used to being rewarded for hard work, and you’ll find yourself motivated to attain your next financial goal.
Inspired to get your financial plans on track? The first step would be to start investing in Mutual Funds through an Investment Services Account with HDFC Bank. Just log in through your NetBanking, go to the Mutual Funds options, click on request, and open Mutual Funds ISA Account.
Click here to open your ISA today!
Read more on how to shield yourself from market volatility by clicking here.
*This is just an illustration with assumed rates to explain the power of compounding. Returns are neither indicative nor guaranteed. HDFC Bank is an AMFI-registered Mutual Fund distributor. Mutual Fund investments are subject to market risks; read all scheme-related documents carefully.