The new calendar year has begun. This is the time of the year during which a majority of us make some resolutions concerning our physical fitness but only a few make resolutions for remaining financially fit. In this article, I propose amazing important financial resolutions, which each one of us should make and watch religiously thereafter.
Let us consider those important resolutions now.
Prepare and adherence to Budgeting of payments
In my opinion, this is the most significant of all the resolutions as all resolutions depend on the successful implementation of this single intention. For financial discipline, you should prepare a budget for your recurrent expenses and compare the budget with the actual expenses at the end of the month. This connection will make you realize whether the deviation from the budget items of costs was avoidable or not. Initially, you may face some problems but within a few rounds the deviation between budgeted expenses and actual charges will minimize and the arrangement will fall in place. Not only regularly budgeting but also, when you go out for shopping your menstrual grocery, carrying a pre-prepared list of things to buy will help you dodge impulsive buying. For meeting your day-to-day expenses avoid using credit cards in emergencies, but use your debit card or internet investment. This will help you spend within your purposes and avoid falling into any debt trap.
Create an emergency reserve
During the Covid-19 pandemic, some have dropped their jobs whereas some have been made to work at decreased salaries. Even the self-employed have experienced no cash inflow or discounted cash flow during this pandemic and particularly during the lockdown. This has made many realize the importance of having an emergency fund. One needs to have an emergency fund equal to six months of loss. This would include not only your day-to-day expenses but also all your regular EMIs for various loans. An emergency fund would help you fight any emergency like a situation like medical emergency, loss of a job, etc. The emergency fund has to be advanced in bank deposits or liquid funds which are not subject to any volatility and can be changed easily and quickly. Those who do not have such an emergency fund or have an incomplete fund cannot create it all of a sudden. So they can do so by starting a regular SIP (Systematic Investment Plan) into the liquid fund which then can either live there or be put in the fixed precipitate with a bank.
Have fair insurance
One of my friends, who were not so well off, has died due to Corona and did not hold any life insurance on his life. His dependents are following severe financial strain. Likewise, the partner of a friend was admitted to a hospital for the treatment of Corona, who remained fortunately but had to foot a huge medical bill. This also has thrown his finances. To secure the financial security of your charge when you are not around, you need to have sufficient life insurance cover, at least 10-12 times your annual income. In case you are not capable to pay the premium of life insurance immediately, please buy a particular accident policy immediately.
Likewise, you should have enough medical insurance for each member of the family to take charge of hospitalization. Please note that though a life insurance policy has to be obtained only for the earning member, health insurance has to be bough for everyone in the family without any exception. Looking at the prevailing cost of medical treatment, each member of the group should have the medical cover of at most limited Rs 5 lakh. In case you are not able to provide the high premium of an individual plan, then simply you can catch a relatively cheaper floater policy.
Invest Regularly through SIP
Compounding is the eighth wonder as Einstein, the great specialist, had said once. If you start buying early you have to start with a lower amount due to the benefit of increasing in contrast to the money needed to be saved if you delay buying. You need to start saving quickly to take care of your various goals. No one has endless income and each one has to manage within the income. So, irrespective of your income level, you can always keep something for your financial needs tomorrow, including privacy, when you're earning stops. Investing within SIP every month will help you bring in some financial discipline.
Do regular exercise
You cannot become financially meet unless you are physically suited. So, resolve to do a minimum of 45 minutes of common daily exercise to keep your body and memory fit.
In case you are confused or find it hard to implement all the above financial recommendations, please take the help of a financial advisor/ planner to make your financial plan and provide you the financial roadmap for your future and course of business to be taken. I would strongly urge you to avail the support of a financial planner to help you complete various financial resolutions in an orderly manner.
The above resolutions should be observed religiously to make your financial life constant and peaceful.