New-Year Personal Finance Resolutions for You

The Year 2016 has been full of surprises be it the rally in markets after the budget, the Brexit, winning of Trump in US and the demonetisation of 500 and 1000 note on 8 November. Though the number of people standing in queue outside the ATMs has reduced, but liquidity is yet to return to the market.

If you are looking for ways to have a healthier personal finance portfolio for the coming year, here are some resolutions that you should adopt for 2017.

1. Clear your debts/loans

After the implementation of Seventh Pay commission, the first thing one must do is to square off or cut any debt or loan with the hiked pay. If you are not a govt employee you should aim to clear or reduce the loan upcoming year 2017.

2. Stop Wasting Money instead Save Money

Attractive offers at shopping malls, restaurants, and online portals lures you to spend money irrespective of your actual need. Not only you will end up buying things that you don’t need, there’s a great depletion to your savings as well. Do not act on impulsive shopping ideas think twice before spending your hard earned money. Instead, save money for financial crises and emergencies.

3. Prepare a Budget

This is the perfect time to prepare a budget for the New Year but more important than preparing a budget is following it. Try to prepare your budget in two major heads viz Expenditure and Savings.

  a) Expenditure Head.

It should have two major head Recurring and Non Recurring. Recurring head should be allocated funds month wise for recurring nature expenses like day to day consumptions of ration, mobile recharge, entertainment,fuel, restaurants expenses etc. Non Recurring head should have allocation of funds for one time expense or occasional purchases like insurance premium (health, vehicle and life insurance), school fees, new mobile, vehicle, vacations etc.

b) Savings Head.

It should be allocated funds for emergency requirements (sum equivalent to six months of your salary is advisable) and long term financial goals like higher education of children, car, retirement etc. First calculate your financial goals from available online calculator (www.investocafe.com/sipCalculation) to allocate fund monthly in the form of SIPs. You can easily reach your financial goals with a long term investment horizon.

Staying within the budget will ensure that your financial goals will be within your reach, and expenses as planned. Try improving on it and update your budget regularly. Remember the saying “Fail to Plan is a Plan to Fail”

4. Make Your Money Work for You

It’s criminal to keep cash lie idle in the bank or at home. Employ your money to earn you good returns. The conservative rate of inflation from 2012 to 2016 was around 8%; which means, if your money doesn’t grow by at least 8 percentage, your savings are actually shrinking by earning only 4% in a savings account. Parking the money in a fixed deposit will be the easiest thing to do, but that too will not beat the inflation. So the wisest thing to do with your money is to invest in mutual funds through SIPs to get inflation beating returns in long term perspective.

5. Be Security Conscious and Updated

Financial frauds are increasing regularly. With each passing day, people are falling prey to fraudsters in greater numbers. According to RBI reports, cyber fraud related to RTGS/NEFT transactions alone were estimated to be Rs 80 crore. So if you don’t educate yourself about frauds, you can probably be the next victim of such frauds. Kindly follow and update yourself with security guidelines being issued by banks and financial institutions.

A new year brings new hopes, aspirations and more responsibilities. So pledge your new year resolutions well with a concrete plan to implement them in life. You would certainly have a financially secure life ahead. Wish you a great and prosperous New Year ahead

Happy Investing!!!

Team INVESTOCAFE

To get in touch please visit us at investocafe.com