Are you making a resolution this new year?
Is it a financial one?
No? Okay, no judgements here.
Everyone wants more control and clarity over their finances, and well, you definitely might have thought about getting things in order but maybe never quite got the time to see it through. Yeah, with all the stuff we have on our hands, we wouldn’t dare to blame you.
Resolutions about finances are similar to all the other resolutions you may have made over the past years in that it is a step towards a better you. What better time than now to renew and steer towards a better self? Hence, we thought to list down a list of six financial resolutions for you, thus helping you take that crucial step you always wanted to.
Before we begin, though, a small note on resolutions. Not that we have ever loved taking advice, but this one certainly got us – Better known as S.M.A.R.T coined in the journal Management Review in 1981, short for Specific, Measurable, Achievable, Relevant and Time-bound.
Your resolutions can’t be anything but smart. No matter what yours are, try not to be vague about them and be specific. They should be measurable and not a giant leap that makes them unviable and disheartens you – we don’t want that! And last but not least, please do it for the reasons that are relevant and matter to you and not to mention following a sensible timeline. A mouthful, we know, not wasting any more of your time. Let’s begin, shall we?
- Make Budgeting a Habit: A personal budget is an essential building block for a financially independent life. You can resolve to start budgeting now. It doesn’t have to be complicated; begin with an app, an excel template, or the good old pen & paper. Note down all the expenses under different heads each month. Please give it a while, and you will undoubtedly get good at it and start drafting your budget in no time.
- Build an Emergency Fund: Nothing has taught us more bitter lessons than the past years about the importance of a financial cushion. An emergency fund can help you take charge and make you more confident about your finances. You can take a resolution to set aside small amounts for this with a goal to accumulate at least six months of your monthly expenses.
- Get a grip over your Assets/Liabilities: Do you have a list of all the assets in your name? No? We are sure that is not the case with your liabilities. Your investments should work for your needs/goals, and you must have a fair idea about the inner working of your assets. Knowing your investment isn’t enough, you must make a habit of reviewing & rebalancing them regularly. Same with your liabilities like home/personalloans, creditcard bills – keep track and make payments on time or make regular pre-payments to pay them off faster.
- List out your goals: Who doesn’t have goals? May it be that long overdue vacation or buying that excellent phone on the market. We have it and want it, but we often fail to plan for it – the worst part, right? But the most crucial one! Start defining, quantifying and prioritizing your goals along with a proper time horizon (Remember SMART). The next step would be to map your goals and investments. Reiterating from above – make your investments work for your goals, and do not invest for the sake of investing. Where is the fun in that?
- Get yourself Covered: We can’t emphasize this enough. If there is one thing you should follow from this blog, this is it – get both life & health insurance cover. Life insurance equips your near and dear ones to weather the financial shock in case of your sudden demise. Along with it, a proper health insurance cover should be your top priority. An adequate cover would ensure you are prepared for medical emergencies with increasing medical expenses.
- Look Beyond: Have you assigned nominees to all your assets? Have you made a will? Or formed a Trust? Who will receive/handle your assets after your death or incapacitation? Will it go to the person/institution you want them to? Even if it seems so now, will it be a seamless process? Estate planning is an essential aspect of our finances that many overlook – hence, plan your estate the first day you own a property. No exception, period.
Finally, remember the SMART Rule, and we hope this helped!
We wish you a happy new year! May this year be a good one for all your financial goals.
Keep learning, Keep Exploring.
If you have a question, share it in the comments below or DM us or call us – +91 9051052222.
We’ll be happy to answer it.
– Nischay Avichal