Making and sticking to your financial resolutions will help you meet your money goals

Financial Resolutions For The New Year 2018
Product Partner Tuesday, December 12, 2017 - 13:14

A new year marks a new beginning. It is the time of year when many people make resolutions to live a healthy lifestyle. At the end of every year just before the new year dawns on us, we hear people say “I’m going to cut down on my alcohol intake” or “I’m going to exercise this year”. While these resolutions are great, one should also think about their financial health. How about concentrating on your personal finance and taking financial resolutions this year? Making and sticking to your financial resolutions will help you meet your money goals.

Reduce debt, you deserve a debt-free life

Debt can cause a lot of emotional stress. Many people who have high debt have reported that they feel anxious and feel fear frequently. This new year, gift yourself a debt-free life. Take some time out to sit down and make a list of all your debt. Start by clearing off the small debts first. This way, you will be motivated to pay off more. Also, consider the interest rate you are paying when deciding which debt to pay off first. Whether it is clearing your credit card bill or closing a personal loan, do it now.

Start saving even if it just a little

We all have heard this phrase “Little drops of water make the mighty ocean”. When it comes to your financial life, small savings can help you create a great portfolio in the future. Even if you are barely getting by every month and you feel saving even a few hundred is impossible, try doing it. Watch a movie at home and save on the movie tickets, party only once a month, stop ordering food and try cooking instead. Do anything that makes you save a little. Consider starting a recurring deposit for Rs.500 a month to start with.

Think before you swipe your credit card

Simply put, when used right, a credit card can be very useful. Before swiping your card, ask yourself if you will be able to repay the entire amount before the due date. If your answer is yes, go for it. If your answer is no, remember that credit card interest is calculated on your average daily balance. Many assume that the interest rate is assessed on the balance amount on the card after payment due date but that's not the case. You will be charged a high interest rate on your daily balance. It is not advisable to pay just the minimum payment as it won’t help you clear your credit card bill ever. This new year lock your credit card away and use it only if you need it and you have exhausted all your other options.

Build a retirement corpus

You may think you are way too young to be talking about retirement but planning for it early will help you retire confidently. There are many retirement investment calculators available online that you can use to plan your retirement. As you step into a brand new year, consider investing in life insurance or mutual funds. Most of us have dreamt of owning a beautiful house on the beach or a country house with incredible mountain views. If you have such dreams, you will have to start investing from now.

Close unnecessary bank accounts

This might sound silly but did you know that banks charge fees and penalties on accounts or cards that you no longer use? As long as your account is active, the bank will continue to charge a fee for not maintaining the minimum amount. If New Year is all about letting go of the past, taking right decisions, and looking forward, why don’t you start by closing all unnecessary financial accounts that you no longer use?

Have an emergency fund

Apart from saving every month, have an emergency fund that you can use in case of an emergency financial crisis. Having an emergency fund will make sure you don’t break your savings when you need money. Have a jug or buy a fancy piggy bank and start dropping the change you received at the grocery store or the money you are left with at the end of the day in it. You can also name the piggy bank with specific financial goals like “To clear credit card balance” or “Pay off my personal loan” and request your family to help you meet these goals by giving you money instead of presents. This may look very small but at the end of the year, you will have enough money to buy yourself a gift.

Ask yourself if your insurance coverage is adequate

In most cases, people get into financial crisis due to high medical bills and they didn’t have adequate insurance coverage to cover it. One of the important financial questions you need to ask yourself this year is if you have adequate insurance coverage. Whether it is car insurance, home insurance, or health insurance, you should be fully covered at all times. As you enter a new year with positivity and hope that good times are ahead, stay fully prepared to face an eventuality if it occurs. Most of us are insured but it is not comprehensive. For example, you may have a third-party liability two-wheeler insurance but in case of an accident, the insurer will only pay for the damages caused to the third-party and not yours. You will be spending money from your own pocket to repair your bike.

Always have a budget

You can write all your expenses and income in a diary or use one of the many personal finance apps available to create a budget. At all times, you should know how much you are spending and on what you are spending. Most of your expenses can be cut down if you write them down. Every month set aside money required to pay your bills and other expenses and transfer the remaining to your savings account. This will make you very disciplined financially and help you save. Many online apps alert you when you overspend and request you to stick to your budget. This can help you if you need a reminder to not spend more, check more in bankbazaar India.

Promise yourself that you will be financially better this year and encourage others to do the same. Happy New Year!

This article has been produced by TNM Marquee in association with Bankbazaar.