Whether you are the CEO of a company or a self employed, whether you are a high income or a low income earner, the financial goal can be generalized as wanting to be financially secure and to retire comfortably. How much money you want in terms of quantity will depend upon your background, employment and life style.

So how can an average self employed or a service person even hope to become a millionaire or a crorepati (other than winning at Kaun Banega….)? But seriously the starting point is pretty simple. List your financial goal-quantify it and give it a time frame. It could be that I want Rs x in my retirement nest by the time I am 58, it could be that I want to own a house and a commercial property and have Rs x in my retirement nest by the time I am 60. At first your goal when listed may seem totally ridiculous an unattainable to you, but do pen it down. Also pen down the logic behind the numbers and time frame provided. Divide your expenditure into revenue and capital. A simple excel sheet will tell you your monthly expenditure which factoring in a rising inflation percentage can be extrapolated. Then you will know that x years hence how much money you will need to meet your daily expenses. This will take care of your revenue expenses, then come to the big ticket items like education, marriage, house, medical etc. A consolidated figure will give you the logic behind the sum that you wanted in your retirement nest.

Against each goal write the amount and the time frame within which it is required. Divide your goals into long term, medium term and short term-the interpretation of term depending upon your age group. And then list the available instruments available suiting the time frame-these could include, government saving instruments, PPF, Post office savings, Growth funds, gold, real estate etc. Once the instruments have been identified, then the approximate returns will also follow through. Choose a mix of the instruments protecting your downside.

The next step would be to list your present earnings and taking a reasonable historical growth rate, extrapolate the same. The difference between the earnings and what you spend will be your savings. So make a spend list, see where and how you can streamline the same. For instance, I once read about a millionaire who was very bargain conscious and always looked for bargains not only in his investments but in his spending too!

Then like Arjun, focus on your goal-Start early, and plan long term-the power of compounding will work for you. Money will earn money for you. Look at long term investments, like PPF, PF, LIC, NSC’s, pure equities, Equity funds etc. Always plough back. Take reinvestment options, no money back policies for you. Be tax savvy. Look for the best time for the investment, for example-if you invest in a tax saving infrastructure bond in the month of March you increase your yield by at least 4-5 percentage points. The same goes for LIC where you stand to gain the entire years bonus even if you invest just before March 31^st. Buy when the funds are down, after all you have a long term horizon so an dip of an year or so shouldn’t really matter to you.

Then like any weight loser, be regular and systematic. Set aside a certain percentage-please note percentage, not the amount of your earnings which will go into long term, medium term and short term savings. Amounts are deceptive but percentages reveal the true picture of your commitment to your goals. For instance a 15% saving target will automatically mean higher savings when you receive your hike the next year. If you are even more ambitious, then aim for an accelerating saving percentage. One way of doing this is to bank your hike and bonus! Don’t blow up your hike on non essentials – ofcourse an additional child in school, or a capital expenditure that you had planned, will not qualify as non essentials, but designer clothes, eating out, exotic holidays etc. can be sacrificed for long term comfort.

Look at systematic investment plans of growth funds with the reinvestment options, which help you even out the price aberrations in the market and put a regular sum aside every month. Plan to reinvest your NSC or LIC policy money back installment rather than blow it up.