Are you planning for your New Year resolutions? Apart from
planning for your favourite resolutions, like losing weight and travelling
more, it is important to make some financial resolutions as well.
Top 5 Financial
Resolutions for New Year 2020
Setting up realistic and measurable goals for your finances
is the first step towards achieving them. Here are 5-financial tips that can
help you start 2020 on the right note
Save More for Bigger
dreams
If you want to start your new year in the right direction
then the first step you must take is to save for your bigger dreams. Savings
for bigger dreams can be anything ranging from saving money for pursuing a
course, international vacation, starting a retirement account or saving for a
home down payment. Whatever it is, you must know exactly why you are saving
for.
Once you know your dreams and how much money you need to
fulfil it, you can proceed with your savings plan. If you want to hit a bigger
target then divide the money you need by the time you have at hand. For
example, if you need Rs. 10 Lakhs for you home-down payment then first divide
the amount you need to save each year.
Next, you need a recurring deposit account to start saving
the money. A
recurring
deposit account allows you to grow your money through compounding and
gives your goal an extra boost. Since it comes with a lock-in period, you
cannot spend it even if you feel tempted. Thus you can save money regularly to
give your goal the required momentum.
Focus on the overall
investment mix: review your asset allocation i.e. the overall mix of
stocks, bonds and cash in your portfolio. Make sure your investment portfolio
is in sync with your long-term goals, risk-bearing capacity and time frame.
Diversification
across various asset classes: diversification will allow you to reduce the
risk factor while helping you to reach your goals. Consider other investments
types like mutual funds or ETFs if they align with your goals.
Consider the amount
of taxes you pay: you may shift to a
tax-efficient
investment if you are paying a good amount of your interest income as
taxes. Some of the investment options that come with great tax benefits are
retirement planning accounts, municipal bonds and ETFs.
Switch towards
Automation:
One of the best financial resolutions for individuals who
forget their bills on time is automating their savings or salary account.
Through automation, you permit your bank account to make your monthly payments
on a specified date to the insurer or a loan account. Automating your account
will help you pay your credit card bills and loan EMIs on time thus saving you
from negatively impacting your credit score. If you have previously missed your
insurance payment then automating your account can save you from missing your
payments.
Stick to the above 4
Financial Resolutions:
Once you have an investment plan in place, make sure you
follow it. Revisit your plan every month and check your progress. Revising your
plan will allow you to remain focused and you can achieve your goals easily
over time.
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