2019 has come to an end and beginning a new year brings all kinds of “New Year, New Me” resolutions in mind. While it is a great time to enjoy the festivities, we suggest that you take time out to reflect on the plans and resolutions for the new year. Before you read ahead, ask yourself, have you been able to meet your financial goals this year? Did you save as much as you initially planned to or did you spend over your expectations?
In most cases, there are more chances of new year resolutions being unfulfilled than actually being followed. But don’t worry, we’re suggesting you a few tips for financial resolutions that will actually work in the New Year:-
- Identify your financial goals
Ideally, identifying your goal should be the first step in your financial planning process. Goals will differ form person to person, the most common being planning for your children’s marriage, children’s education, buying a house or a car or planning a foreign trip. Whatever be your goal, make sure they are specific, measurable and you are able to put a monetary figure to them. Once you’re clear with what you want to achieve, you can devise a plan or strategy that you will follow to fulfill the goals.
- Keep Track of your expenses
In this Digital era, one swipe is all you need to make an expenses, hence it is very important to track your expenses use budget tracker app like Spending tracker, Spending tracker, Mint, Goodbudget etc. to monitor your monthly expenses.
- Asset Allocation – The key to investing
In investing always follow Asset Allocation approach. As they say, do not put all your eggs in a basket. Each asset class has its own cycle, hence to maximize returns always allocate your investment across multiple asset classes like Equity, Gold or Real Estate
- Prepare an emergency fund
Some expenses in life come unexpectedly. Hence, you must always be prepared. Prepare an emergency fund that you can utilise in case of an emergency – whether it is a medical emergency or someone close requires your help in funding urgently, you should keep funds that you do not use unless the situation demands for that. Investing money in a fixed deposit can also help.
- Save up your tax
Think of ways in which you can save tax from your taxable income. We would suggest investing in ELSS (Equity Linked Saving Scheme) or NPS (National Pension System) which will help your save tax along with growing your wealth. To give you a brief, ELSS & NPS helps you save on income tax by investing in equities. The Income Tax Act allows taxpayers to invest up to Rs. 1.5 lakh under section 80Cand in addition Rs. 50,000 under section 80CCD that can be claimed as a deduction from taxable income.
- Pay your bills on time
Timing is everything when it comes to paying your bills. Not only does paying bills release the tension from your mind, it also improves your credit score. Bank or Credit card agencies charge very high rate of interest approx 15-25% which can cause a big hole in your pocket.
- Invest in Knowledge
An investment in knowledge always pays the best interest. Invest some time or money (if required) in attending finance webinars, reading finance-related books and you can implement your learnings into your financial strategy and planning.
- Save before you spend
The best way to go about saving more money is to save first then spend instead of saving what is left out at the end of the month. Saving after you spend is difficult as you might not be able to save enough or anything at all by the end of the month or year.
We hope that these tips will help you in the coming year and even in the future to come. Saving up isn’t a difficult task if you plan accordingly. Having sound finances should be a means and not the ultimate door to happiness. If you are financially free in your life, you can then focus on your health, relationships or pursue your dreams in the way you had always imagined.