As the new year approaches, we get busy making resolutions related to health, lifestyle, etc, but do we ever make financial resolutions?
Given that the wealth-creation journey is one of the most crucial aspects of sustaining yourself, why don’t we make resolutions for them like we do for our health!
But what kind of resolutions can I take? Don’t worry, we’ve made a list of some of the financial resolutions for you to make your 2024 financially fruitful!
I will take stock of my debt:
It is important to understand where you stand in terms of what you owe and how soon you can close that liability. The longer that you continue to hold a liability, the interest component increases.
I will figure out my tax-saving strategy:
Yes, it is complex and boring, but unless you want to pay more in taxes than you should, you need to address this immediately. The deadline is March 31 and if you start today, you can invest via SIP in ELSS funds and spread out the amount reducing the risk of timing the market with a one-time investment.
I will buy health insurance:
Health Insurance: Some do, most don’t. The recent pandemic was a good reminder as to why one should have health insurance. Medical emergencies could appear out of nowhere, it is important to have health insurance of your own, not just one given to you by your employer.
I will build an emergency fund:
Like health emergencies, there could be other emergencies that need to be addressed monetarily. For this reason, it is important to build an emergency fund which has roughly 6 months of your income.
I will create a monthly budget:
You’ve heard this more than once in your life and that is because it actually helps. You can follow the 33-33-33 rule, allocate 33% of your income to investments, 33% to needs that cannot be avoided and 33% to wants that could be eating out, shopping, etc.
I will decide my asset allocation:
After you have allocated a percentage of your income to investments, you need to decide where you will make those investments. Depending on all the factors of your life, you should allocate to different asset classes and diversify your investment portfolio.
I will invest in assets that beat inflation:
The equation is very simple, the investments you make should have returns more than the inflation rate otherwise the value of money is decreasing faster than your rate of return. In the latter case, your real rate of return is negative. Asset classes like stocks, equity mutual funds, etc generally deliver returns over the rate of inflation.
I will not make FOMO investments:
Often, you see talks of something being the next 5X return avenue, it is difficult to hold your ground when you hear of such numbers but you need to stick to your decided asset allocation and tune out the noise.
I will upskill:
In this constantly evolving world, it is important to continue upskilling to ensure that you have a skill set that is relevant and serves a purpose. This upskilling could also generate a secondary income source for you.
So what are you waiting for? Use this list of resolutions and start your 2024 with financial stability and clarity!