Realizing your dreams is not a dream!

Realizing your dreams is Not a dream!

We all have dreams. Dreams are our hopes of future! Dreams give us sense of purpose and keep us alive. They give us direction and keep us moving forward! Our dreams are very close to our hearts and we all wish if our dreams can come true!

Your dreams are the ‘Big goals’ which would mean ‘big changes’ in the way you think, the way you live and the way you work. But as any change would meet reluctance initially such big changes are daunting particularly if you are comfortable with your present. But isn’t it what you wished and aspired for…a change from your present? These changes are your journey towards realizing your dreams. And along this journey you may have already made few changes and must be making some of them even now and that’s exactly what you need to do…small changes that are aligned to the big changes you wish to make. Small changes are easier to make and higher the number of small goals or changes you have attained, greater will be your faith in the present reality and larger will be your hope to accomplish the big goal. But these changes, small or big, should be more than mere wishful thinking rather they should be well defined and thoroughly analyzed realistic action items

Besides doing all the changes you need to be realistic. Being realistic will help you have realistic expectations and set achievable goals. The reality checks may give you some realizations… some very interesting realizations at times! Like, May be you are closer to achieving your dreams than you actually thought! May be you have already achieved some of them and are now aspiring for new ones! May be you want to change the old ones as the times have changed including you! Whatever may be your realizations, you are close to realizing your dreams when you can define them, explain them and enjoy them.

Also, you may face several challenges during this journey and some of them can be very discouraging. But instead of giving up and abandoning your dreams, be hopeful and be persistent! Your dreams are your promises to yourself. They are the promises to keep faith in your abilities and work hard to accomplish and achieve all you want. You are very close to realizing your dreams by being realistically hopeful.

Therefore to realize your dreams you need all you need to do are…small, realistic and promising changes!

Let us examine some dreams to appreciate how starting small, being realistic and being hopeful can get you closer to realizing your dreams. Following are the three dreams which some one can have as a professional, as a parent or as an investor.

Dream: ‘I wish I could have my own company’!  

Hope: As a professional you may wish to turn into an entrepreneur and become an overnight success. Be hopeful and envisage your success story in business magazines and think of your company’s name and logo to start with. Nevertheless from finalizing a marketable idea to collecting funds and getting enviable number of customers is a long way to go.

Reality check: You have a realistic idea when you are sure of its being commercially viable. Also your idea would need funding and Investors would look for return on their investment. Along with a saleable idea and projections of growth they would look for people who are qualified as well as passionate about their idea. Besides having impact on your professional life this decision will also have impact on your personal and financial life. Your own venture will mean a shift from regular income from job to irregular income. It may also mean some waiting period before you start realizing any profits. It is advisable to get into something entirely new only when you have taken care of your financial liabilities like loans and personal responsibilities like child’s birth and education. You are realistically hopeful when you have got back up plan ready i.e. in case your venture does not take off, would you like to and be able to go back your previous job? Or are there other options available? Is there any alternative source of income in case your payback period delays?

Small steps at a time:  Big goals involve big time frame. Therefore once you have decided as to ‘When’ you want to start your venture you can start working backwards. The first step can be validation of your idea by conducting a market research. If the research results in about 20% positive sentiments then you may need to revise the idea. However if there are 70% positive sentiments then your idea is generally acceptable. Small steps like widening your network among the fellow professionals or joining online & offline forums both as a manufacturer and consumer will give you wider and deeper perspectives about the industry. Social media is gaining momentum day by day.  By establishing your identity on social media you can get potential investors interested in your activities. Also it will prepare grounds for future marketing initiatives. At the same time you should keep fortifying your finances by paying off your loans fully or partially, preparing the medical and nonmedical emergency funds and adjusting the expenses as per forthcoming monetary situation. Higher will be the level of preparation and planning, greater will be your confidence in achieving your dream.

Dream: ‘I want to give world class education to my child’! 

Hope: As a parent you may wish to send your child to the best college in the world. Be hopeful, your child can for sure become a Harvard graduate and start next Google and Facebook. However as you already know that possibilities and perspectives are not created in one day and it will need focused efforts to boost your child’s confidence and prepare him/her to take on world class challenges.

Reality check: You are realistic if you are aware of the fact that out of several thousands of applicants around the world less than 5% get selected in Harvard each year. The Ivy League colleges are very selective about the intellectual as well as emotional ability of students. Even fee, which is upwards of $150K (over 1 crore rupees) is high enough to discourage many from being able to afford it. It will be judicious to keep your child and yourself emotionally ready for the alternatives. Prepare your child to choose next best choice of college in case they don’t get into their dream college.  And you can consider taking education loan in case you could gather the required amount.

Small steps at a time:  Your child’s elementary and secondary education is the foundation step for college admission. You have taken a small step once you select a school that focuses on overall development of children and also provide them international and intercultural exposure. Along with grooming in school, grooming at home will play an important role. You can take various steps to increase your child’s intellectual and emotional intelligence at home. Activities like doing puzzles and brain teasers, playing games like chess, reading then explaining and debating on various topics will help in increasing their IQ. Internet surfing (under parental guidance) can also be useful. It will help your child connect globally and help them understand other’s perspective. And they will develop their own perspectives when put to various ‘what if’ situations. By spending time with your child and sharing anecdotes, you will help them understand the real world and there by prepare them to handle real situations.  Similarly activities like playing with other kids, participating in group discussions, meeting people of all age groups will increase their social and self awareness. Hobby like drawing, story writing or playing musical instrument will help them de-stress and channelize their emotions productively. In order to prepare finances you can start saving and investing small amounts regularly and as early as possible. If you are able to gather large sums, you should consider keeping it safe by investing in debt instruments. Since, you are the one providing for your child you must take adequate life insurance for yourself and not for your child. Such steps will gradually shape up a bright future for your child.

Dream: ‘I want to get high returns on my investments’! 

Hope:  As an investor you may wish to earn high returns with minimal risk. Be hopeful and imagine yourself taking all dream vacations and buying all dream cars! But as you know investments take time and need proper strategies to grow and give good returns.

Reality check: You have realistic expectations from your investments when you remind yourself that high gains come with high risk and high risk may even mean losing all your money. Very few investments can give guaranteed returns and the actual returns should be calculated after accounting for inflation and taxes. Besides aiming for good returns, your investments should be a result of careful deliberation of your financial landscape. Equally important are your emotional and intellectual outlook which will define your reactions to result of your investments.

Small steps at a time: In the series of action items your first step should be defining the investment objectives like preparing down payment for buying your dream thing i.e. a car or a house. Prioritizing your requirements will be the next step. This will decide the time horizon of your investments as well as the amount required. It will help you determine expected returns on your investments. On the basis of which you can prepare your investment strategy and finally choose the product. At same time you should explore ability then your willingness to absorb the outcome of your investments. For example,  if you have conservative growth expectations in your profession then maybe you should reconsider having aggressive expectations from market linked investments. Similarly if you have small amount that you cannot afford to lose and want to use as per your convenience then you should consider investing in safe instruments like fixed deposits without worrying about returns being taxable. The best investment strategy is the one which can make the right amount available at the right time. And the best product is the product which you can understand and use as an individual investor and not as a financial wizard.

Dream Big but start small and start today!

All these examples and their analysis assure that taking well defined and thoroughly analyzed small steps will get you closer to your dreams and help you realizing your dreams!

In personal finance: ‘Comprehensive Financial Planning’ is the series of…‘small (sometimes big), realistic and promising changes’ which get you closer to your dreams and help you realize them. It comprises all the steps taken with respect to your financial landscape in the above situations.

During the exercise your dreams and aspiration are translated into meaningful goals with defined time horizons. You current financial landscape which comprises of your personal, professional, physical and financial situations is thoroughly analyzed to understand ‘where and how’ you are at present. It tells you the realistic distance of your present from your dreams of future. The exercise gives you specific action items aligned with your goals. Further, the continuous monitoring of the plan keeps you aware about the adjustments required in your actions or your aspirations.

Be a Dreamer…Be Realistic…Be Hopeful!

Shake up your dreams and Wake up for reality checks!

You can also read this article on personal finance website 'MyIris'. http://www.myiris.com/financial/storyShow.php?fileR=20121018090239715&secID=finan&secTitle=Financial&dir=2012/10/18

Ever saw an accident victim or met with someone who has lost his job? You may have felt sad for them. At the same time how much you wished and believed that this will not and can’t happen to you! More often than not you would wish to live in dreams where every wish of yours is successful and everyone around you is in good health. Life, however, is full of both pleasant and unpleasant surprises. In your dreamland, you may choose to deny and run away from the unfortunate incidents but in the real world they may catch you sooner than you think of. Surprises can’t be avoided but you can definitely prepare yourselves to face them when they happen. The best way is to do regular Reality checks.

Reality checks “question”everything what you believe will come true. They compel you to deliberate upon possible favorable and unfavorable outcomes of the developments happening in all aspects of your life i.e. be it personal, professional, medical or financial.

Here are some of the dreams and their financial aspects that need reality check!

1. Fortune of good health

When was the last time you went for a health check up?

Some people avoid it because they believe that nothing shall go wrong with their health. Some avoid them as they are too afraid of the results and wouldn’t want to face the doomsday. Both type of people are in state of constant denials. Doctors are concerned about how stress alone is causing to worsening health reports every year. Regular checkups can help you track your health and take corrective measures before small problems turn into bigger issues.  The amount of money you will spend on them will be much smaller than what you will be required to spend should they become large problems.

If you are in a corporate job, you can join the regular health camps covered inyour HR policies. You will be motivated by seeing your colleagues around and your family will be motivated to see you doing it. You can buy an insurance plan that reimburses preventive checkups at least once a year. Also allocate some part of your monthly budget for medical purposes. If it is not used, it will accumulateto build towards medical emergency fund. Always renew your medical insurance. Critical Illness like heart attack or cancer can completely drain you financially.Buy exclusive insurance policy covering critical illness. Try to get maximum coverage possible depending on your age and premium paying capacity. After all “Health is Wealth”.

2. Bliss of double income

As professionally qualified working couples do you think none of you will ever take a career break?

Women often take career breaks when they want to bring up children. Even men take sabbaticals to reflect upon their career progress or to deliberate upon possible career shifts. Some may be willing to take a break for pursuing entrepreneurial instincts. In all of these cases some part of family income gets discontinued. Obviously your lifestyle gets a jolt if one source of income dries up. This has a strain on personal finances, makes you anxious and compels you to mull over your decision again and again. By carefully planning your finances you can save a lot of trouble.

The important point to note is…’Plan your finances before you take the decision of career break’. Be able to visualize your life after the break has happened. Now write down all sources of income and expenditure both before and after the break. Differentiate between discretionary and non-discretionary expenses. Expenses like house rent, loan EMIs, school fees, regular household expenditure can’t be avoided. Also insurance premiums like life insurance, medical insurance, home insurance are unavoidable. You must prepare everyone in the family for some lifestyle modifications like reducing the number of outings and vacations, restriction on gifts, postponing purchase of high value items. The circumstances may force you to cut down on your yearly investments. In such cases allocate your investments as per your reduced risk taking ability. Also, your cash flow should include forthcoming expenditure in case of new additions in the family.

3. Ladder of continuous promotions

Are you sure of getting regular raises, bonuses and promotions in your career?

Tough economic conditions are making it difficult for the companies to match thebonuses and raises they used to give in the past. Promotions are slow and even deserving candidates are being left out. It becomes even more difficult when you climb up the corporate ladder. There are a too few positions for too many. It will be wise to keep a backup plan ready to handle disappointments.

The most important aspect of your financial back up plan is to avoid extrapolating your income on the basis of the highest raise you ever got. Rather take a conservative approach and make assumptions as per the industry average. Keep in touch with the job market to evaluate your financial worth. Even the entrepreneurs and freelancers should do it in case their venture does not turn out to be as profitable as expected by them. Examine if you will be able to amass enough wealth to take care of your retirement or children’s education and settlement. If not, then you should be mentally prepared to postpone your retirement or think of a way to generate secondary income.

4. Magic of affectionate relationships

Do you wonder why family court and relationship counselors exist?

Cases in family courts are rising every year and money is the major reason for it. A lot of married couples have disagreements about spending habits. Some even hide their full income and investments from each other because theybelieve their spouse to be unreasonably extravagant. There are some who assumes full responsibility of home finances and do not share issues like debt or financial losses. Such actions jeopardize the very foundation of the relationship i.e. Trust! It eventually leads to increasing number of arguments and fights. They land up with counselors and in extreme cases with the family courts. An open all inclusive communication on money matters can save a lot of troubles.

The key is to take all family members in confidence, which includes even your children! Everyone should be encouraged to participate in the budget planning every month. It will give them a chance to understand the financial situation of the family and adjust their expenses accordingly. Financial health checkups every year are the best way to avoid surprises. Such checkups are comprehensive in nature and detail out everything from your assets to liabilities, sources of income to reasons of expenditure, investments and insurances. Also regular ‘Financial Get together’ can simplify matters like inheritance as everyone will know ‘what to expect’ in advance.

5. Heaven of ever growing investments

Would you be shocked to see the actual monetary value that you can realize from your investments?

As an investor some people are firm believer of ‘long term investments’ and hardly revise their investments till the long term arrives! Some feel ‘magic of compounding’ will keep working for them and they will be rewarded with a huge sum of money for keeping patience. Patience is virtue but it alone cannot help you when it comes to finances. A carefully planned strategy is important to achieve your goals through your investments.

Always define the purpose, time horizon and return expectations of your investments. Revisit them at least once every three months. It is imperative to align your investments with your goals like kids college admission fees, down payment for buying house, vacations, retirement and the like. Purpose will help you formulate the entry and exit strategy and timing for your investments. Since everyone has unique situation and money psychology, invest only in those avenues which can give you a good night’s sleep. Stay away from becoming victim of fashion in personal finance.

Finally:

Reality checks will keep your dreams real!

Comprehensive Financial Planning exercise can help you inquire and investigate your dreams. It is a reality check which encompasses all of the above suggestions and much more. It is in-depth study of your overall situation. You will be required to write down your dreams and convert them into quantifiable goals. The action plans thus prepared will take you closer to your goals and hence to your dreams. Let all your dreams come true!