While making resolutions about weight loss, work, time management, etc. are common, we often overlook aspects related to our money. Given the fact that we work our backs off throughout the year to make money, shouldn’t we make plans to safeguard our wealth? Ideally, we should do so, but choose to push such resolutions to the back of the list. And one can only imagine what happens to such resolutions.
Now some of us are probably confused as to what these financial resolutions should be, for understanding money is perhaps as hard as making money (If not more). For the uninitiated, here are 5 resolutions which can help one lead a better life.
- Pay your EMIs on time – Take a quick look at your wallet. Chances are that you probably have more than 2 credit/debit cards. Given the ease of getting a credit card, most of us gleefully take new cards, feeling happy that we have more money to spend. While credit cards do help us meet our financial commitments, overspending can become a huge issue. Also, remember that we have to repay this amount, which we typically do in the form of EMIs. While some of us pay the entire due amount, there are a number of people who choose to pay the basic minimum amount due. Doing this can lead to higher interest payments, which can have an adverse impact on one’s bank balance.
The same holds true when it comes to paying the EMIs for loans. Be it a personal loan EMI, a home loan EMI, or an education loan EMI, ensure that you always make the payment on time. In addition to helping us avoid the trap of additional interest, timely payments also help improve the credit score, which could have multiple benefits in the future.
- Don’t take additional debt – Getting loans/credit is no longer a hassle. One can apply for a personal loan online/get a new credit card over a phone call. Given this ease, we might be tempted to take more loans and/or credit. Sure, this will make us feel good, but this joy is fleeting, for any money borrowed has to be repaid, with INTEREST. The interest rate for a product is determined by various factors, with it typically ranging anywhere between 10% p.a. and 20% p.a. for loans. Interest on credit cards can be even higher. If you need extra money, make sure that you have the means to repay it within a stipulated period of time.
- Invest in insurance – When was the last time you truly thought about the future of your loved ones? All of us try our best to provide for our loved ones, but miss out on an extremely crucial aspect when it comes to securing their future. This year, make yourself a promise: A promise to invest in insurance. Purchasing a good life insurance policy can help secure the financial future of your loved ones. With multiple options available, one can customise the policy to suit his/her needs.
A life insurance policy isn’t the only requirement. Go beyond and invest in a good health insurance policy. Given technological advancements, it is possible to purchase a good life/health insurance policy online. Additionally, these policies also help one save on tax, making them even more alluring.
- Diversify your investments – You’ve heard about not keeping all your eggs in one basket, with this even more important when it comes to money. This year, choose to invest in multiple avenues, as per your requirement. Right from mutual funds to stocks to gold, ensure that your money grows as you do. With a plethora of options available, spend some time doing research and go ahead with the investment, for this money could become extremely crucial during an emergency.
- Stick to your budget – This is perhaps the most crucial resolution you should take. Always ensure that you stick to your budget. While you might be tempted to spend more (You can always repay the amount in EMIs, right), sticking to the budget will hold good during testing times. Doing this also inculcates the habit of saving money, and one can use this money to invest in instruments which will offer returns.
We might have broken a number of resolutions in the past, but with a new year dawning upon us, perhaps it’s time we make a resolution not to break our resolutions as well.