Do we need to wait for the New Year to make resolutions for a better financial being? I don’t think so. Any time is good time to get started with financial planning. That is why we have put down a list of some resolutions that you can take towards firming your financial profile.
Plan your Budgets:
One of the things we often talk about but are bad at doing is monthly budget planning. This is an important step to take control of one’s finances. The half battle is won when you start to put down all your earnings and how you are gonna spend it every month.
Whether you want to go with a simple way of noting it in a diary, maintaining a spreadsheet or using a money management app, just start doing it the right away. This will help you spot the expenses you need to cut down and stick to your budget each month.
Reduce your Debt
Keep a track of how much debt you want to take off your back in the year. It is best to get rid of the high-cost loans first. Credit cards, personal loans may seem tempting but they come with high-interest rates. Better pay off the high-cost loans as much as possible, this will surely leave you with more money for savings or investments. Monthly payments for your debts should ideally not be more than 35% your income.
Save for Emergencies
Risk looms over all aspects of our lives. We should be prepared for any nasty surprises life throws on our financial fitness, it can be anything from the lawsuit, natural calamities, death to sickness.
Two things can be a savior at this time, one is your emergency fund and second is your insurance coverage. Make sure to invest in both the things carefully. You can seek professional help to find the right insurance cover for various aspects of your life. And for a good start to the emergency fund can be a small amount as well. For e.g. Parking aside 5000 a month in Liquid Funds can fetch you a pool of around Rs. 62000 by end of the year, this will serve as multi barrel advantage, saving as well as growing your money at the same time. You can decide how much you can save, depending on your current finances.
Optimise your Portfolio
A financial plan acts as a great tool in simplifying your financial life. Invest time to create a plan covering all aspects of your finances. You should revisit overall asset allocation, a mix of bonds, stocks, and mutual funds in your portfolio.The trick is to sync all these with your risk appetite and, long term goals.
Consider diversification of the assets. Mutual Funds are a good way to start your diversified basket of securities. Keeping a check on your portfolio and making changes as required, can go a long way in your financial fitness.
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