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10 Resolutions for 2019 That Will Make Your Financials Stronger

Jan 04, 2019 | 2 years ago | Read Time: 4 minutes | By iKnowledge Team

Often people say that New Year’s resolutions are made only for breaking them. However, setting realistic resolutions can be a highly effective way to achieve your goals. The start of a new year can be a great time to review your finances and define your personal financial goals. Before you set any resolutions for the year, ensure you take stock of your assets and liabilities, and evaluate your spending and saving patterns for the year gone by. Once you have a good idea of your financial standing, here are some resolutions you can adopt to ensure a healthier financial life. 

New year resolutions 2019

1. Budget, budget and budget

One of the most important resolutions which will ensure better health of your finances is budgeting. Budgeting is critical in ensuring that you are not spending money you don’t have, courtesy of credit cards and loans. In fact, as per data released by the Reserve Bank of India, credit card debt in India is at an all-time high of Rs. 42,100 crore with annual rates of interest on credit cards ranging between 26 and 48 per cent. However, merely setting a budget at the beginning of the year is not enough, it is equally important to evaluate and tweak your budget as the year progresses, to make sure your spending and saving patterns are on track to achieving your goals.

2. Pay bills as soon as you receive your salary

While it may seem elementary, getting into the habit of paying important bills such as your EMI payments, rent, electricity, and other major monthly obligations is a very important budget adherence strategy that will vastly improve your financial health. Not only does paying bills on time improve your credit score, it also helps you avoid any unnecessary costs associated with late payments and gives you a realistic sense of how much money you have left each month for other expenses, savings and investment.

3. Make saving plans before investing plans

If after evaluating your finances over the past year you see that you have not been saving or not saving enough, get into the habit of adequate saving before you make any investment plans. While budgeting, ensure you divert a certain portion of your monthly income after paying all mandatory expenses and cut down on unnecessary spending.

4. Start investing in your health and the health of your loved ones

The importance of investing in a health care plan that provides adequate protection and coverage for you and your loved ones cannot be emphasized enough especially at a time where medical costs country-wide are spiraling. According to a report published by Mercer Marsh Benefits medical trend rate, which refers to the per-person cost increase (due to medical inflation) in India is likely to rise at double the inflation rate. If you have already invested in a health insurance plan, make sure you reevaluate your plan as an individual’s need of health insurance changes from time to time, given changes in income, family structure, health conditions and your plan should be updated accordingly.

5. Add more to your emergency fund

While no one wants to think about losing their job, the future can be unpredictable and you have to prepare for it. As a rule of thumb, your emergency fund should cover 6-8 months of all your day to day expenses, and is critical to avoid a financial crisis in case anything happens. However, you cannot build on this in a day, and your resolution should be to dedicate a certain amount of your salary every month to the same.

6. Start planning for your child’s future

From the moment our child is born, as parents, we want to ensure we are able to provide for their every need. With that said, it is never too early to start preparing for your child’s future, especially given rising education and medical care costs. According to a report by the National Sample Survey Office (NSSO) average private expenditure for general education has increased by 175% to over Rs. 6,788 per student. While making your child plan, take into account the age of your child, the money you want to save, rate of inflation.

7. Secure the future of loved ones

While nobody likes to think about it, the reality is that you may not be around the whole time to provide for your family and loved ones. Uncertainties of life mean that you need to make sure your financial plan will provide coverage and protection for your loved ones in case of your accidental demise. There is a wide variety of insurance plans available on the market, including term plans and unit linked insurance plans, and if you haven’t already, give priority to investing in a life insurance plan that provides adequate coverage to your loved ones. For instance, the iTerm Plus Insurance Plan offered by Aegon Life offers a wide variety of coverage, including protection against 36 critical illnesses, accidental death benefit, lower premium rates for females and non-smokers

8. Start thinking about your retirement

You may be thinking that you are too young to think about retirement, but that is never the case. Start saving and investing for your retirement from the beginning of the year to ensure that you have financial stability and can afford the life you are living right now even after you retire.

9. Work upon improving your credit score

Having a bad credit score adds to your financial problems, making it difficult for you to gain access to credit, whether in the form of loans or credits cards. It is important to monitor your credit report to check for any errors and evaluate upon how you can improve your score. Taking simple steps such as making payments on time and avoiding using the entire limit of your credit card can help improve your credit score.

10. Eliminate impulse shopping habits

With the advent of online shopping and lucrative deals at your fingertips, it is often difficult to escape the urge to shop impulsively. Buying things you do not need not only depletes your savings but also is a great hindrance to achieving your financial goals. Adopt steps such as having a waiting list for purchases to determine if you really want them, avoiding going to malls and shopping centers and online shopping websites to stick to your resolution.

II/Jan 2019/4754


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