Financial Protection for Millennials - Short Term and Long Term Financial Needs.

Updated: Jul 10

Since this thread is for millennials its imperative that we don't jump to most pressing financial needs of a personal life. Though its better we approach it like we approach anything in life. Short term view and long term view.

As our goal is to be finding more actionable approaches rather then theoretical its imperative that we divide and conquer our goals. One of the common things i face and seen many of my friends complaining is when i do any planning for sound financial planning i get overwhelmed as the fund requirement i would be having in future is so big that it looks unthinkable.

Now there could be multiple ways to look into it:

- Is it big because its not broken into achievable pieces?

- Is it big because i have some undue expectation which is just not my reality?

- Is it because my present is so unmanaged that future projection which is based on present is not achievable?

- Is it i don't know necessary financial instruments which can help me achieve my goals?

These four are the major reasons i find which causes inadequate financial management. In this article lets tackle the 1st one.

If you have a realistic target for your future financial position and you know various financial instruments then you might be sitting on the 1st problem which is your Financial Goals are not divided into Short term and Long term.

Its good idea to make a list of financial requirements you would have in coming future. Good idea would be start by creating a wish list, a typical wish list would look like below:

  1. Need to buy Car

  2. Need to buy Home

  3. Need to Ensure best schooling for kids

  4. Need to buy real estate

  5. Need to buy Accumulate for College for kids

  6. Need to accumulate for Children's marriage

  7. Need to accumulate for Retirement

  8. Need to carry cushion for Health expenses

If you see financial needs are quite similar for vast majority of population what varies is how much we earn, how frequently we earn and whats your approach towards spending and financial decision making. Clearly, 1st two are somewhat fix (not technically but we can assume for majority of us) last is something we can do about.

Key idea now would be to segregate our needs into more analytical form, something like below table.

Once you gain clarity of your present and future financial needs/goals with some additional parameters i.e. Short/Long and what frequency you would need the money you can work with Investments and Saving instruments available to meet these goals. Needless to say one big component would be amount saved from your income can only help you with above goals.

Market is flooded with Investment and Saving products you just need to find the right advice and analysis to leverage them and work towards meeting above goals. At this stage we shall just list the various instruments but would cover them in detail in future posts: Stocks, Derivative, Mutual Funds, Life Insurance, Health Insurance, Savings and retirement plans, loans and fixed deposits. A perfect marriage between your goals and these financial products should get you the financial stability and independence.


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