A new year means new financial goals. You will feel more at peace all through the year if your finances are under control and planned. You could jot down a few financial goals for the new year which might include plans to reduce your credit card debt intelligently, improving your credit score and creating a personal budget, among others.
People all across the country want to focus on their financial health, as much as physical and mental health, as one influences the other. A lot of you would want to save and invest more in the next one year to secure their future. However, everything starts with first assessing your financial situation and goals, and then acting upon it.
Here are the top 5 financial resolutions you should make this new year:
Set Goals With Reasonable Return Expectations
At times we tend to have unreasonable expectations and we would be more tempted to do so than ever before as the market returns were good last year. But that may not always be true. List down your short- and long-term goals and align them with your return expectations. For example, for short-term goals, you may invest in fixed income instruments which will give you moderate returns, while for long-term goals you may invest in equity and get returns that beat inflation.
Update Your Budget
Having a monthly family budget is always handy. It can actually help plan in a better way. “Failing to plan is equal to planning to fail so it is always better to sit with the family and plan the monthly budget in detail. Also just to add on, making the budget is the first part, the more important thing is to track it and to ensure that we stick to it,” says Anant Ladha, founder, Invest Aaj For Kal, a financial planning firm. Only when you have a budget and stick to it will you be able to save a part of the income.
Pay Off Your Credit Card Debt Entirely
You are not the only one struggling with credit card debt. Think of an intelligent strategy to pay off all your credit card debt with minimum interest within a short period in the next one year. Remember if you manage to create a surplus as mentioned previously, you can use it to pay off your credit debt.
Secure Your Family By Buying Term And Health Insurance
We always feel that we don’t need sufficient insurance, until it is too late. So it’s better to have sufficient insurance cover well in advance. “Term cover can be 10 times your annual income and the health sum insured can vary from 10 per cent to 25 per cent of your annual income, depending on your personal finances,” says Ladha. Also remember to read the fine print and take note of exclusions.
Invest Regularly Irrespective Of Market Volatility
Volatility is part of the game. Invest regularly to get good returns over a long period of time. “At times it may appear that the market has not delivered good returns over five days or three months. During such times, always zoom out and see what market has done in five years or 30 years,” adds Ladha.
Having said that, good financial planning can go a long way in providing you with peace of mind. It is recommended that you take financial advice from a professional financial planner.