A new year marks new beginnings. The start of a new year brings new hopes on the horizon and you want to do everything right to enjoy a better life. It is a good time to reflect on the year that went by and see what worked and what didn’t. While you must continue doing what gave you good results, it is also a time to change what didn’t work in your favour. New year resolutions are a good way to bring about this change. They can range from developing a good habit, volunteering for the community or being mindful with your money. Financial resolutions can help in building a secure and financially independent future. Here are a few such resolutions that can give you and your family a better lifestyle.
Do you often wonder where your money is going? If this is the case, budgeting can do wonders at tracking your money and also cutting your expenses. The golden rule is to save first and spend what is left. The good news is that you don’t have to be an excel wizard to make a budget. There are several apps that can make this task easy for you. To make an approximate budget you can look at your previous months’ expenses. Itemise your various buckets of expenditures like grocery, electricity, entertainment and fuel. Allocate the money that you would like to spend on each of these buckets. Track your expenses in the app as and when you spend your money. Budgeting can help you from spending on unnecessary items and can also save a few extra bucks.
2. Retirement fund
Most of us work in private firms with no pension options. Do you prefer to live in the moment without caring a dime about your future? It may be a good option theoretically but you don’t want to step into your golden years with little or no savings. A retirement fund will help you to maintain your current lifestyle in your later years. You may think that there is still time to think about retirement. In reality, you will reap more benefits by starting early. If there is one thing that all the financial experts agree upon, it is the power of compounding. Starting early will grow your money by manifolds and you can build a big corpus. With a healthy retirement fund, you can travel in your later years or buy the house of your dreams. It is the best gift that you can give to your future self. You need to have a retirement strategy so that you can choose the best products and meet your goals.
3. Emergency Fund
Emergency never knocks on the door with a prior warning. In such situations, inadequate funds can throw anyone off balance. The best thing you can do is to have an emergency fund in place. At such times, this fund can provide some much-needed mental peace. As a thumb rule, you must save three months of your income in this emergency fund. If you do not have such a fund in place, this new year may be a good time to build one. It may take some efforts but you will definitely thank yourself if any untoward incident were to happen.
4. Start investing
You may be following a budget and saving money. However, money sitting idly in your bank accounts will not grow by itself. Investment is important to grow that money and subsequently build wealth for yourself. With a good investment strategy, you can generate an alternate stream of income. It will make you independent in the true sense and will give you long-term financial security. When it comes to investments, you should never lay all your eggs in one basket. You must diversify your investments into multiple products to lower the risks and increase your returns. If you have a keen interest in stock markets, you can start investing in it gradually. However, if you do not have the time to track it regularly, you can opt for mutual funds. SIP is a good way to enter mutual funds as it brings the savings discipline and also lowers the risk. There are several other products in the market that can give you decent returns over a period of time. You need to understand your risk tolerance before you commit to any of these. Another benefit of investment is the tax benefit that can enjoy with some of this products. A financial advisor can assist you in choosing the right products for your portfolio.
5. Increase your financial awareness
It is unfortunate that our education system often neglects personal finance. An individual realises its importance only when he starts earning and is on his own. You can follow blogs and podcasts to increase your awareness of money management.
balaswamy bollePosted at 00:20h, 23 January