Family Budget
Keeping your expenses within a budget will ensure you reach your personal finance goals. If you're already budgeting for your family, stick to it. If there are any unnecessary expenses, eliminate them and increase savings.If you've never set a family budget, the New Year is a great time to start. Include this as first in your financial decision.
Divide the monthly salary or earnings into following parts. 30% for household expenses (rent, food), 30% for lifestyle expenses, 20% for savings, investment and 20% for loan repayments. If you reside in your Own house and if you don't have a loan, you can get rich quickly if you add the amount to savings and investments.
Track Savings and Spendings
Saving should be an important part of our life. It is an important tool for achieving your financial goals. Create a spending plan while creating a savings plan. In doing so, costs are kept under control.Practice saving a certain amount of salary and income and spending the rest. By doing this, saving is never interrupted. You can easily save from 10% of salary to 50%. Make a financial resolution this year to increase your savings instead of increasing your spending to match your increase in salary.
Health and Term Insurance
The foundation of financial planning is taking a life insurance policy to protect the future of your loved ones. If there is no income earner in the family, it is necessary to calculate the amount required to maintain the standard of living of the family members and take a life insurance policy for that amount.Term insurance is very affordable, providing more coverage at lower premiums and providing complete financial security to family members.
A general rule of thumb is to have life insurance worth 10-15 times the family's annual income. If there is a home loan, car loan, personal loan, etc., it is better to take a separate term insurance policy for that amount.
If you already have life insurance, increase the coverage amount sufficiently. If you haven't taken life insurance yet, now is the time to do so. Be sure to include this in your New Year's resolution.
Next, take out a health insurance policy that will reduce the family's medical expenses. Take a policy of Rs.5 Lakh - Rs.10 Lakh. Get as much as you can. If not, take a policy for Rs.2 lakh or Rs.3 lakh and top up policy for Rs.5 lakh or Rs.10 lakh. The reason is that while the general consumer inflation rate is 6% - 7% percent, the medical inflation rate is as high as 18% - 20%.
Emergency Fund
The impact of Covid-19 has taught us all that an emergency fund should always be ready to help in times of crisis. Always keep cash ready for at least three to six months of expenses. This amount can be in fixed deposit or liquid mutual funds. This amount should not be touched unless required.Minimize and Close your Debts
Bad credit creates stress and anxiety for a person. So, this year, resolve to live a stress-free and peaceful life by avoiding bad debts. You can avoid debt problems by reducing your credit card spending. Next, emotional stimulation can reduce or avoid unwanted substance purchases. It is better to understand that debt is the biggest obstacle to the proper execution of financial plans.Also See: 9 Mistakes you Make with your Credit Card
Prioritize Investments
Savings and investment can be increased by cutting unnecessary expenses. Saving money is equal to earning it. Savings account earns around 3% interest. Keep some money in savings account only for very short-term needs and invest the rest in debt funds for medium-term cash needs and equity funds for long-term needs. Also, increase savings without increasing spending when salary increases. This will help you achieve your financial goals sooner. So make a resolution to increase your SIP investment every year in this New Year.Also See: 10 Methods for Successful Stock Maket Investment
Check your Retirement Corpus
If you are not eligible for pension after you retire from your career, you are responsible to build your own corpus for the retirement. Try to review the corpus accumulated, or try to create one if you have not not planned yet. As the inflation increases, you need to plan your retirement corpus accordingly.Also See: Old Age Home Expense and Cost in India
Plan your Income Tax Ahead
Make a financial resolution to start investing in income tax saving investments from the beginning of the year. Investing at the last minute to get tax benefits is often misplaced. Realize that planning ahead at the beginning of the financial year can help you choose the right tax saving investment based on your age, risk appetite, financial goals and needs.Create a Financial Calendar
Make sure to create a calendar for financial matters. You can plan what expenses and investments should be made in which months, and you can keep them in it. Monthly payments, payments to be paid at certain intervals, annual payments and the dates for them, etc. can be noted in it. A diary can be used for this. Or you can mark it on the monthly calendar with a colored marker so that it is visible.Discuss with your Family
Teach your children to save money. Make them understand the family's financial goals and get them involved in the family budget. Plan together as a husband and wife. Share financial responsibilities with family members. Before making any big expenditure or investment, the family members should sit down together and make a decision.Gain Financial Knowledge
Resolve to learn about Personal Finance Management. For this, you can browse through this blog and visit websites like Economic Times, The Hindu Business Line etc to be aware of the day to day financial news.Keep New Year's financial resolutions and goals realistic. This is more important to be on track in your personal finanical journey.
