Financial Resolutions for your New Year

It's the time of the year when we are all busy making resolutions for the new year. We have many resolutions but we miss out on our financial resolutions. Achieving them does not happen overnight and it is easy to lose track of them as the year goes by.

"You can't prioritize goals if you don't know what your goals are yet. So, the first goal is to have goals and to break them down into small micro goals that are easy and accomplishable," says Chelsie Moore, certified financial planner

Here are a few resolutions for 2023

1. Re Budget

Since we are starting afresh in 2023. It's time to re-budget and manage cash flow appropriately. The budgeting exercise will assist you in efficiently allocating your earnings accordingly to outgoings, savings and investment plans in order to meet your desired financial goals.

2. Build an Emergency Fund

Considering the recessionary risks which directly impact economic growth, it's advised to start building an emergency fund.

The Ideal emergency fund to be maintained by an individual considering all the expenses and EMIs is a fund to hold sufficient for 12 months.

3. Pay off your Debts on time

With the rate of interest increasing exponentially, starting from the new year pay off the debts as much as possible. Interest can build up quickly if you're only making the minimum payments, so making a conscious effort to pay back these debts.
Aim to maintain the debt-income ratio below 40%.

4. Invest time in Financial Literacy

There are several sources like reading books related to wealth management, financial growth, enrolling in financial planning classes and researching on internet on finances.

Financial literacy equips you with the right financial awareness and money management skills. This shall help you prioritize on utilizing your hard-earned money effectively, make informed financial choices and effectively execute the resolutions you have set for the New Year.

5. Seek help for Proper Tax and Investment Planning

Most common mistake is investing at the end of the fiscal year, this is poor financial planning. The Income Tax Act encourages investment and provides various deductions for investments like sections 80 C, 80D.

Invest in tax-saving funds like Public Provident Fund (PPF), National Pension System (NPS), National Savings Certificate, Tax Saver Deposits, Unit-Linked Insurance Policies, and Equity-Linked Savings Schemes (ELSS) in mutual funds.

Prepare your tax papers well in advance and seek the help of a Professional to avoid Penalties, Interests and Notices.

Coming to the investment part, start investing in the right place, right time with proper guidance.

Investments should be rewarding and helping you achieve your financial goal.

Buying Health insurance is also a financial plan.

Start with a simple RD or FD then move on investing in the SIPs and mutual funds.

"If you want to be financially free, you need to become a different person than you are today and let go of whatever has held you back in the past." - Robert Kiyosaki