Financial Decisions, Tips, And Resolutions For the New Year

financial decisions

The new year has arrived. What to do this year? What not to do? Everyone makes some resolutions on that. Exercising to maintain good health, following a diet, and spending time with family are just some of the goal-setting shareware that you can use to make a new life and invite good habits into your life. Similarly, some decisions have to be made financially. Most people do not think big about finances. Their perception is that they do not have enough money to save. It is enough to invest a small amount when you have a low income. Make some new decisions in this new year as they are worth the revenue.

Ask yourself: The past teaches us some lessons. Financial experts say that if we take into account the experiences we have seen in the past and the lessons learned, we will be able to make appropriate plans for the future. We have experienced corona conditions like never before in the last two years (2020, 2021). What conditions did you encounter during this time? To what extent has the Covid-19 effect affected your financial goals? Did income and expenses increase? Are you down? Ask yourself that. Only then will you be able to make realistic decisions that can be achieved in the new year.

Insurance: Covid-19 informs the public about the importance of health insurance. Those who did not have health insurance during this time faced difficulties with hospital expenses. Yet Covid‌-19 fears have not left. Newly Omicron concerns have begun. Everyone needs to take appropriate precautions to counter this. Be especially vigilant when it comes to health insurance. Everyone should take out health insurance with coverage that suits their family health needs. Term insurance must also be taken in such uncertain conditions. If an acquaintance dies accidentally, the family will face many financial difficulties. So if there is a good term policy it will be financially viable for the family. So even if you do not have health, term insurance, or adequate coverage, for now, focus on these in the new year.

Emergency Fund: In case of accidental cessation of earnings, the onus is on the earner to ensure that family expenses are not interrupted in case of any reduction in earnings for any reason. Therefore, make this decision if you do not have an emergency fund set up by now. For this, money can be invested in fixed deposits and liquid funds. You must have at least six months' worth of cash to cover family expenses.

Unnecessary expenses: Where do you think the new money will come from to set up an emergency fund? However, reduce your unnecessary expenses. Make lifestyle changes. Then there is the opportunity to save. Online shopping, dining in hotels, foreign tours, movies, dinners, entertainment, etc. can be set up as an emergency fund if reduced to the required level. However, analysts believe that it would be better to spend only what is needed and cut down on unnecessary expenses. Every rupee spent should be calculated. Make a list of all the necessary and unnecessary expenses. You will find yourself wondering how much you can save by cutting down on small expenses. So cut down on unnecessary expenses and invite in the new year with savings. It is a good idea to list each expense in a book. Examining the expenses each month will help you understand where they are spending the most.

Don't get into debt: Debt is not good for your financial life. But it has now become a habit for individuals to incur debts in order to fulfill their desires and interests. With the rise of zero interest rates and credit cards, it is becoming easier to borrow and pay on a monthly basis. Sometimes these can lead to losses. Decide not to borrow in this new year. However, if the EMI is paying off existing loans, make it a decision to pay them off. It's okay to take out a loan in an emergency. But financial experts suggest not taking out a loan for luxuries. Repay loans with high-interest rates. Credit card loans carry an interest rate of 36-48% per annum. 12-24 percent on personal loans. These loans should be repaid as soon as possible if available. Paying off credit cards or personal loans in the form of EMIs is not a wise idea to use the money for investments. This is because the interest paid on the loans is higher than the total return on the investment. If the amount you owe on credit cards is more than your one-month income, it is a good idea to withdraw some of your investment and pay.

Review: Review your portfolio once a year. Last year saw a flurry of IPOs and NFOs. With this many people bought new stocks. Review portfolio rather than clutter. Investors need to ensure that returns outweigh inflation. It is advisable to consult a financial professional before investing.

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