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Goal Planning Calculator: Plan Your Financial Future with Ease

Imagine you are driving without a destination in mind. You take random turns, stop whenever, and after hours on the road, you realise you are nowhere special. Now, just think the opposite: you have a clear destination, a GPS guiding you, and a timeline to reach your goal. This also applies to your personal finances. Having a financial goal in place helps you avoid managing money aimlessly. A financial goal planning calculator can help you systematically plan your investments.

What is Financial Goal Planning?

In financial goal planning, you set financial goals and develop a roadmap to achieve them. Financial goals can be broadly divided into short-term, medium-term, and long-term. In general,short-term goals are those which you want to achieve in the next one to three years. For instance, you want to build an emergency fund or go on a vacation can be considered as short-term goals.

The medium-term financial goals are typically those which you want to achieve in the next 4 to 9 years. An example of a medium-term goal is buying an SUV. You can consider financial goals to be long-term when you want to achieve them in the next 10-15 years or more. Retirement planning, buying a dream home, and saving for your child’s education and marriage are all examples of long-term goals. When investing in your financial goals, ensure that you invest based on your time horizon and risk profile. Financial goal planning helps you understand where you are, where you want to be, and how to get there.

What is a Financial Goal Calculator?

The financial goal calculator is an online tool that helps you determine the future value of your financial goal, accounting for inflation. Moreover, it also helps you calculate how much monthly SIP you need to do to achieve the same. To get the results using the financial goal calculator, you need to provide certain inputs such as goal amount, existing investments (if any), expected rate of returns, expected inflation, and period left to reach your goal.

How do Financial Goal Calculators work?

To calculate the future value of the goal amount, adjusting for inflation, the financial goal calculator uses the following formula

FV = PV (1+R)^N

Where

• FV = Inflation-Adjusted Goal Amount
• PV = Goal Amount
• R = Expected Inflation
• N = Period to Reach Goal

Let’s understand the working with the help of an example. Say the current cost of your financial goal is ₹50 lakh. Assuming an inflation of 7%, you want to know how much you will need after 10 years. Here is how the financial goal calculator will calculate the inflation-adjusted future value of your financial goal:

• PV = 50,00,000
• R = 7%
• N = 10 years

FV = 50,00,000 x (1+0.07)^10 = ₹98,35,757.

Now, let’s understand how to calculate the monthly SIP that you need to do to achieve this financial goal. Let’s assume that you don’t have any existing investments and your expected rate of return is 15%.

Now, you can calculate SIPs using Microsoft Excel or Google Sheets using the PMT function.

Open Excel or Google Sheets and apply the PMT function:

=PMT(15%/12,10*12,0,-9835757,1)

You can copy and paste the above formula in Excel or Google Sheets to get the answer.

As we are calculating the monthly SIP amount, we have converted the expected rate of returns (15%/12) and period to reach goal (10*12) to monthly value. Further, we have put 0 for PV as we assumed no existing investments. FV is 98,35,757, which we calculated in our example.

Once you enter the above formula, the required monthly SIP works out to be ₹35,297 per month to achieve your financial goal.

Alternatively, you can also use our online SIP calculator. to calculate how much you can accumulate using SIP.

How to Use the Purnartha Financial Goal Calculator?

The Purnartha Financial Goal Calculator helps you in calculating the future value of your financial goal and the monthly SIP required to achieve the same.

• Enter the Goal Amount. This is the present value of your financial goal.
• Add Existing Investments, if any.
• Enter your Expected Return Rate (p.a.)
• Enter the Expected Inflation (p.a.)
• Finally, enter the Period to Reach Goal (In Years)

Once you provide the above inputs, the Purnartha Financial Goal Calculator instantly calculates the future value or Inflation-Adjusted Goal Amount and Monthly SIP Required to achieve your financial goal.

Benefits of Using the Purnartha Financial Goal Calculator

• The Purnartha Financial Goal Calculator helps you calculate the amount that you need to invest each month to achieve your financial goal.
• Moreover, you can tweak the expected rate of returns to understand how much risk you need to undertake to achieve your financial goal.
• Using the Purnartha Financial Goal Calculator, you can calculate how much money you need, accounting for inflation.

Frequently Asked Questions (FAQs)

What are some examples of financial goals?

Financial goals are subjective and can be different for different people. However, here are some of the most common financial goals:

• Building an emergency fund
• Retirement
• Saving for a child’s education and marriage
• Vacation
• Early retirement
• Venturing into a business
• Buying a car
• Buying a home

Why is it important to set financial goals?

It is important to have a financial goal as, without it, your financial planning is baseless. Setting financial goals helps you be clear about what you want, what it costs, and by when you want it.

Having financial goals in place helps you to remain focused on your financial planning journey,avoiding any kind of impulse behaviour and stress.

What is the 50 30 20 rule?

The 50-30-20 budgeting method helps you have better clarity on how your money moves. This method allocates your income into three baskets: needs, wants, and savings, where,

• 50% is for needs, which generally include paying for rent, food, bills, and transportation
• 30% is for wants, where you would like to indulge in activities such as eating out,shopping, and subscriptions
• 20% is for savings, where you save and invest towards achieving your financial goals.

What is a smart financial goal?

SMART goals are a better way to note down your financial goals. To qualify your financial goals for SMART, you need to ensure that your financial goals are Specific, Measurable, Achievable, Realistic, and Time-bound.