Let’s look at some of the smaller resolutions that we could look at for the coming year:
Keep track of your expenses
As we all look forward to the New Year 2015, by making certain resolutions for our betterment, one of the most important resolutions that we must also look at is to manage our personal finances well. Personal finance resolutions will definitely help us manage our money for the long term.
If you have been a complete spendthrift this year, try and identify those areas where you have gone overboard. These could include things like spending too much on celebrations, eating out, buying fancy and luxury items, spending on unwanted gadgets, frequent trips or even paying premiums on unwanted insurance products or wasting money on overdue penalties. Once you have identified those areas, it will be easier for you to keep track of your expenditure and savings. The simplest way of getting sorted is to first invest and then spend. This will help you save enough for the long run.
Keep track of your debt
While you are keeping track of your expenses to cut down on unwanted expenditure, it is also essential to take a closer look at your debts. If you have too many loans on you like a credit card loan or personal loan, it’s time to get rid of them. However, if you have a home loan running, try to identify ways of making frequent prepayments in the coming years, so that you can get rid of the home loan. But keep in mind; it is first important to do away with unsecured loans as these loans carry high interest rates which could impact your investments.
We may have left all our reading on our personal finances to our financial planners, all these years. Some of us may not even have had the time or inclination to take a look at our portfolios as we have left all of it to our financial advisors or planners. So this year, make it a point to educate yourself on the various investment products, tax products, basics of investing and review your portfolio. Experts say you need not master it all, but basic working knowledge is definitely required.
Invest in small quantities
If you are finding it difficult to save and invest, the best way to do it is to start investing in small quantities. By doing so, you will easily be able to create a corpus for the coming years. For instance, if you are keen on saving a lakh of rupees in a year, you should save a little over Rs 8,000 per month. Instead of waiting for a lump sum amount to be accumulated so that you can then invest, it is always better to start with smaller amounts, by way of a systematic investment plan or recurring deposits, so that you do not waste time.
Choose products carefully
Experts say that most of the people buy financial products blindly. Buying traditional insurance products is the best example of this. Premiums are paid every year on such policies, without realizing how low the total sum assured is. Sadly, most investors decide to invest only at the last minute, at the end of the financial year, in order to save taxes. These steps could impact your overall financial health. Hence, it is important to plan your tax investments at the beginning of the year, choose the right products, buy insurance and get rid of debts so that you can then focus on fulfilling your financial goals. If you have missed out on buying a health or life insurance, do it now. It will help you and your family in case of any contingency.
By taking baby steps on your financial planning, you can be rest assured that your financial goals are in place and you are well placed for the future. It’s never too late—start today. The New Year is a new start. Take a closer look at your financial health; rectify your mistakes and be proud of the right choice that you’ve made.