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The Most Essential Financial Resolutions for Beginners in 2023!
Happy New Year!!
Savings and investing have become integral part of our life and are indeed our financial backbone. Small modification in the life style today can create a larger difference moving ahead. So, let us start this year with the most essential financial resolutions to ponder upon when it comes to savings and investing.
Analyse the past year and Plan for the future
Plan your savings and consider the things you can change for this year. Ask yourself can you reduce your expense and increase your savings? Or what should you do to increase your income? As far as investing in concerned, what you did right? And what you should have or should not have done?
Examine your successes and failures from the previous year and develop a financial planning strategy by yourself or with the help of a certified financial planner to get better results.
Investing in yourself
Read more about personal finance, including how to save more and invest with patience & discipline. You can start reading a book on investing and personal finance for achieving your money goals and financial resolutions. You may also consider talking to an experienced financial consultant for devising your personal financial planning and start investing. As far as possible, stay away from any kind of free financial advice from the social media.
Most of us forget the importance of protecting our loved ones since we spend so much time talking about investing and growing our money. Having enough life insurance should be a top priority for safeguarding the interests of our dependents. You must start with a life insurance plan that will meet the financial needs of your family in your absence due to a sudden demise.
You can then gradually move on to buying a health insurance plan to pay off medical expenses considering the rising costs of hospitalization and subsequent medical treatment.
Creating a Budget
You should begin working on this resolution at the start of the year, and you must revisit it each month. Draw up a preliminary budget and note your fixed and flexible income sources. This will help you discover unnecessary spending and provide you a clear picture of how much of your income you can invest and save. Simply recording it in a journal or using Microsoft Excel to manage your finances are good places to start.
Over time, this habit will help you create a structured approach towards saving and investment planning.
Set up an Emergency Fund.
You never know when a financial crisis will knock on your door. Do you have enough money to handle an unexpected circumstance? What if all of your money is invested in risky securities? In an emergency, when you redeem an equity mutual fund, you may not get the desired return if the investing time frame was short and also the maturity amount is available after three days, emphasizing the importance of having enough bank savings or investment in debt mutual fund to cover unexpected costs. This emergency fund should have enough money in it to cover expenses for six to twelve months.
Avoiding Heavy Debt by Paying it off
Since a new year is a new beginning, wouldn’t it be wise of you to not carry your debts into the next year? So, if there are any major debts on your financial calendar, it is best to leave them in the previous year by paying it off as much as you can. The less you have to worry about the debts, the more funds you will have for investments which will result in coming closer to your financial resolutions and achieving long term gains.
Avoid Making Rash Decisions.
So many people rush into investing without sufficient understanding in the hopes of making some extra cash from the market. The unasked-for guidance on social media handles should be added. By paying attention to them, many people have delayed the timeline of achieving their desired financial goals. Do invest in equity mutual funds only after you have good understanding of how financial market works. As far as possible, avoid trading directly in shares. An analysis suggests that most of the investors are not able to beat the FD returns via trading.
Build a Source of Income for the Future
You won’t always be healthy and youthful, and you won’t always be motivated to work hard. You must invest in equity mutual funds to get returns that not only beat the inflation but also help build the much-needed corpus in order to secure adequate money to cover your post-retirement needs and wealth goals. You can also consider contributing to the National Pension Scheme (NPS), which invests your funds in accordance with the fund manager and scheme of your choice.
However, make your financial goals a priority before choosing your investment asset class, separate your objectives into short-term and long-term financial goals, as well as the reason of why you hope to obtain a particular sum of money. Only then will you be able to make an informed decision about your investments and long term financial goals.