12 Personal Finance Resolutions you should make for the New year!!

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The year 2012 is around the corner & we at Fpguru.com want to share with you twelve new year resolutions you should keep for the year. The resolutions are simple steps for your financial freedom!

 

1. Get Financially Literate- The first step is to get financially literate. This does not mean you need to be well-versed in finance, economics or mathematics. It just basically means that you have an idea of investment avenues, risk & return, nominations, insurance needs, saving, etc. Understanding personal finance is the key! The simplest way to achieve this is to read personal finance magazines & websites like Fpguru.com.

 

2. Start budgeting- Budgeting is like the first step to financial freedom. Having a budget will help you see a clear picture of your finances and equally help you make investments to achieve your future goals. To make a budget one needs to jot down their income-expenditure and know where exactly one stands financially and gets a better picture of their lifestyle.  Unnecessary expenses can be avoided and surplus invested will help to achieve future goals.

 

3. Keep a contingency fund- Let’s begin the New Year by starting a recurring deposit for a contingency fund. This is nothing but an emergency fund in case of any loss of income, losing a job or loss in business etc. and should be used only during emergency. Most of the banks offer such accounts. If you have ample money in your savings bank A/c, shift an adequate amount to a contigency fund to be used only during a financial emergency. One should keep atleast 3-6 months expenses and EMIs in Savings’s bank ac/c, short term bank fixed deposits,ultra short term debt funds or in a Flexi-deposit bank a/c. Thus having a contingency fund helps you face financial emergency without disrupting your other finances.

 

4. Understand your financial situation- This is a very underrated action even by most financial planners & advisors. Do not compare yourself with others. Everyone has their own strengths & weaknesses financially. Calculate your net-worth & understand your own family background & situation. Do understand that financial advice can be generic till a certain level only. Beyond that it differs from person to person.

 

5. Adequate life cover- One resolution each one of us make is to keep our family safe and secure. So this New Year let us take a step to ensure they are financially secure in the event of our unfortunate demise. Let us buy adequate life insurance cover. Life insurance is a must for those who have dependents and must be ranked top on the priority list. An approximate cover of nearly 10 times your annual income should be bought in order to be sufficiently covered.

 

6. Mediclaim and other general insurance- With the ever rising cost of medical facilities, it may get difficult to provide the best care for yourself & family. Hence a mediclaim policy must be obtained to ensure we never fall short on funds to care for our family. Several other general insurance covers are also available to protect us from any financial loss that may incur to us. These include home insurance, motor insurance, fire insurance etc. These policies should also be purchased to ensure that you and your family are protected for the year to come.

 

7.Cut down on liabilities- Liabilities are nothing but debts, loans and obligations in one’s life. The sooner they are cleared the more stress free one’s financial future will be. It is important to understand which loans are actually required and the ones to be avoided. However cutting down liabilities should be one of the important financial resolutions as this will not only increase your net-worth but also make you lead a debt free future.


8.Chalk down your financial goals now!- With the New Year just around the corner, it is essential to first figure out the financial goals we wish to achieve in the coming year and in the years ahead. Having a financial goal makes it easier not only to achieve them but also know how realistic they are. Once the financial goals are jotted, list them as per their priority. This will enlighten you exactly which goal is required to be funded first, as only then can you start your investments.  A financial goal is like planning an itinerary for your vacation.


9. Imagine your retirement and work for it- It is never too early to plan for your retirement. If you are earning, it is time to start now. Retirement is that phase of your life when your income stops and you live on your savings. Hence it is of grave importance that you have adequate funds when the time comes. As we move into a new year, it’s a year closer to your retirement age. Planning and saving for it early will give you the opportunity to benefit from the equity market and accumulate an adequate fund for the future.


10. Start saving and investing regularly- A man is not rich because of the money he earns but the money he saves. Saving a part of your money to achieve your future goals is a must. However, merely saving it is not going to make it grow. Investing this money into the right instruments while keeping in tune with your time period will ensure you have the adequate money when you need it.

 

11. Do your tax-planning- The government provides individuals with tax sops for investments & other social benefits. Medical insurance, retirement schemes, infrastructure bonds, etc, can all be invested in to reduce your tax liabilities. This is not tax evasion but tax planning. They do not only provide tax deductions but also help in your overall financial planning.

 

12. Make a will- Wouldn’t you like to transfer the financial freedom enjoyed by you to be transferred to your heirs post your demise? Well, then a will is what you should make. A will is a personal statement you make with regards to how your wealth should be distributed post your demise. It ensures that only those who you want to receive your legacy, get the same. You pass on your assets to your family members without any bad blood between them.



If you haven’t started your financial planning this year, do start it in the New Year. It’s never too late to start. You can avail of the services of a financial planner for the same too if you need more professional advice. We at Fpguru.com have started our Personalised Financial Coaching services for the same reason.  We at Fpguru.com believe in ‘spreading financial enlightenment’ & it is with this idea that we have started this website. Do support us in the coming year as you have done in this year!

 

Wishing you a Happy & Prosperous New Year!!  Let the wheels of financial nirvana roll!




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