FINANCIAL RESOLUTIONS 2019
The beginning of New Year comes with an enthusiasm for new resolutions to achieve the target and implementation of new habits which will impact the whole life and our resolution is incomplete without setting our resolutions for financial health.
To keep our financial life in order here are list of resolutions which we need to implement in our life to make it stress free.
List of financial resolutions is as follow:
- EXAMINE YOUR FINANCES
First step we should take in our financial resolution is that we should examine our expenses and savings of throughout past year to examine which month we had save more than spent, and take a note what we did to make that happen and we can also start by looking at our bank statement in which month we has spend more.
Start with preparing a budget to track movements of money both inflow and outflow. If budget is not up to the mark, there’s no better resolution than to start one and get a better handle on income, expenses and debt.
- INCREASE YOUR SAVINGS
Most people say they want to save more, but don’t know how much they should save or where they should save it. Best way to analyze how much savings is required can be done by doing goal based planning. We can allocate our savings to different goals like retirement planning, child education planning, Vacation planning and many more.
- PRIORTIZE AND REVIEW YOUR GOALS
Goal based planning helps us to identify our financial goals and work best when we start early to create desire fund for future. Instead of investing randomly, goal based planning gives a perspective to investor and aims to track investments based on long term goals. If investors have clear short or long term goals, they can have better asset allocation depending on their time horizon and risk profile.
We should review our goals and find out if there are changes in our life, changes in job/increments/ loss, if any of our goals have been achieved; if there have been birth or death in your family, or change in the family size on account of marriage; it makes sense to re-look at the goals and re-set the plan.
- REVIEW YOUR LOANS
We should review existing loans and ensure that all loans help in increasing your net worth (assets- liabilities). In case they do not, we should plan for repaying the same. We should also review that our interest cost on loan is less than return on our investments. If it is not then should redeem our low yield investments to repay loans. We should also find out the ways to reduce our interest burden.
- DIVERSIFY YOUR FUND WHILE INVESTING
Don’t put all eggs in a single bracket, we must diversify our investment and distribute our saving in different segments. In the financial market, there are several segments with different benefits and the different rate of return, which will fulfill our future requirement.
- REVIEW YOUR INVESTMENTS:
Asset Allocation decision involves deciding the percentage of investable funds to be placed in equities, bonds, real estate, gold, and cash equivalents. It is decided on the basis of our return requirements, risk tolerance and the time horizon in conjunction with the expectation about the capital markets and individual asset class. We should also review risk and return of our individual investments and should take corrective measures if it has underperformed the benchmark.
- PAY BILLS ON TIME
We must start our financial resolution 2019 by paying our bills on time, like credit card bills, mobile bills, grocery bills, schools bills, and electricity bills etc that will not only save us from paying more interest but also directly impact our credit rating.
- PREPARE FOR EMERGENCY FUND
People who lack an emergency fund are tempting fate, putting themselves at risk of financial catastrophe in the event of unexpected unemployment or major medical expenses. So building up some reserves should be one of the first priorities for any financial makeover.
- REVIEW YOU WILL
Writing up a will and ensuring it’s regularly updated seems like a task that is never high on the list of things to do, but in future we will thank ourselves for undertaking this very task, as will our dependents. Meet with attorney to see if any updates are needed in will or trusts, as it is understandable that not only financial situation may dictate an adjustment but also our personal preferences as well.
