3 simple steps to get your finances on track in 2017
Resolutions are passé, say some. Resolutions changed my life, believe a few. Resolutions are meant to be broken, smirk others. Whichever category you belong to, there are a few resolutions that ought to be a part of your life – financial resolutions. And trust us; these are not the ones to be broken. We have put together a list of the top 3 resolutions that should ideally form an integral part of anyone’s financial plan. If you are already following a few of these, then more power to you! For others, now is as good a time as any to take a few of these resolutions and convert them to habits that secure your financial future.
#1 Budget, and never stray
If there is one golden rule for managing your personal finance, it’s this. If you want a future that is not debt-ridden, then you have to be responsible about your money. The easiest way to create a budget is to write down every single thing that you spend in a month – right from the rent you pay, down to the biscuit you bought. Write everything down, and at the end of the month you will be surprised to see where your money went. Then use that information to weed out the frivolous from the essential expenses. Read here on how to divide your income, and allocate funds for your different expenses and investments. Use this as a guide to create your own budget and make sure you stick to it, in the year ahead. You will be pleasantly surprised to see how well your discipline pays off.
#2 Create a financial plan
If you haven’t done so already, now is a good time to start planning your financial goals in life. Identify your long and short term goals; holidaying in Europe, for instance, could be a short-term goal, while funding your child’s education or buying your own house is a long-term goal. One of the mandatory long-term goals that should be a part of your portfolio, is your retirement plan. Calculate how much you need to save up to achieve each of your goals (don’t forget to factor in inflation as you calculate this). Once you know how much wealth you need to build, work out a plan to actually achieve them (You can use our handy investment calculator to help you arrive at this figure).
Take stock of where your current investments stand (if any) and what are the returns you are getting from them. See how much more you need to build and in what time frame, to bridge the gap between where you are now and your goals. Start a Systematic Investment Plan (SIP) for each of your goals. If you’ve just received your annual bonus, or have some idle money in your account, move it to a high yielding mutual fund, best suited for your profile and requirement. Depending on the time frame you have for each goal, you could opt for equity (long term) or debt (short term) funds. To make things simpler, you could use our friendly robo-advisory service Money Mitr, or speak to our financial advisors for free, to get a better understanding of which are the right funds and investment options for you. Every day that you haven’t invested, is a day where money, that could have been made, is lost. This New Year, take the smart step forward of actually converting your dreams into destinations that you will reach with strategic, planned steps.
#3 Limit your loans and start a SIP
If you can’t altogether wipe off your debts, strive to limit them to absolute essentials. It can be quite tempting to indulge in frequent shopping sprees on exorbitantly priced products, through credit cards and EMIs. But beware, that if you aren’t prudent about your spends, you could soon see yourself burdened with a pile of debt, and spend the better part of your high-earning years paying them off. Understand the beauty of compounding, and how investing early can work wonders for you in achieving your dreams, with little or no loans. Get a clear understanding of what your absolute, essential expenses are, versus what you want on a whim. Chalk out a plan to see if you can achieve your goals, like buying a house for instance, without loans, or at least with less of it. Investing smartly in a SIP, for the same number of years that you would be paying off an EMI, can help you get what you need without a loan, and even better, sometimes with extra cash to spare. At FundsIndia, we offer guided advise on how to plan your investments to achieve your goals systematically. Register with us, and take advantage of our free services!
So there you go! 3 simple steps to get you on a fast track to sorting your finances. For more information about investing, personal finance and other ways to build wealth the right way, you browse through our informative blog too!
Here’s to a great, financially smart 2017 to all!
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