April marks the start of a new Financial Year. Every new beginning gives us a chance to change for the better. This would be the perfect time to make financial resolutions for this financial year and for the life ahead for a secure and healthy financial future ahead. Here are 5 financial resolutions you must take this year:
I will Create an Emergency Fund
This resolution helps you remain prepared for the rainy day. Having a healthy corpus of at least 6 months’ expenses towards emergency fund is desirable since it helps you with a sufficient financial cushion towards any unforeseen event. So, if you have not yet created an emergency fund, making one should be your first priority in this financial year. Also, being a smart investor, invest this emergency corpus in relatively high-yielding, low-risk instruments like liquid funds etc.
I will Plan my Tax-Saving Investments over the Year
A disciplined and consistent approach is key to investing to achieve a desired set of goals. Being a finance professional, I do receive many phone calls in the month of March to guide people for tax saving instruments and this story continues every year. However, when you rush to invest in Feb-March, you have fewer options available and end up investing in the instruments yielding lower returns. Also, investing at one go at the year-end stresses the finances during the respective period.
Hence, make sure you plan your tax saving investment at the beginning of the financial year itself. This will allow you to take more prudent saving and investment decisions and keep you stress free.
I will Start Saving in a Systematic Manner
For a majority of the population, investing is only for the purposes of tax saving. Little do they realize that there is a larger investment scenario beyond tax savers. One must start saving and investing at an early age to reap the benefits of compounding. However, even if you could not start earlier, it’s always better to start now. You must enroll for systematic investments like Recurring Deposits, Systematic Investment Plans (SIPs) in Mutual Funds, etc. which help you inculcate a financial discipline with periodical investing. These small investments don’t make much difference on monthly basis but indeed go a long way in building a healthy investment corpus.
I will Stay Informed about My Investments
When it comes to managing our money, lack of knowledge about various investing opportunities often restrains us from earning at least reasonable returns. Also, many of us are not aware of the investments already made, since they are generally made at the advice of a friend/ tax planner/ CA. Once the investment is made, we believe that the job is done.
But, if we monitor our investments, we can better plan our finances by including the redemptions and returns from such investments into our financial planning. Being an informed investor is the most important way to protect your money and, in fact, grow it steadily. So, make sure, you prepare a complete list of your investments with details of redemption/maturity/returns etc. to help yourself make better investment decisions.
I will Keep Track of my Finances
As I become more savvy with managing my finances and investments, it is important that I track my finances regularly. There are some wonderful free apps like Money View which make this work simpler.
I resolve that I will keep my financial resolutions for this year and for the rest of my life. Do you?
Simardeep Singh is a Chartered Accountant based in Delhi. He loves sharing his knowledge about personal finance and investment. He blogs regularly at www.simardeep.com.
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