Most people who make new year resolutions fail to keep it for long. But if you do make one for improving your financial health, the probability of you keeping the resolution is much higher.
This is because unlike other resolutions where you have to diet and or exercise daily, resolutions for personal finance need only the initial effort. For instance, once you have given the necessary standing instructions to the bank to debit a particular amount each month, it will be done automatically.
``In case of your personal finance, a new year's resolution can be far more productive as a one-time change can be made in such a way that it can have recurring benefits without you having to do anything on a recurring basis,'' says Harsh Roongta, CEO, Apnapaisa.com.
We have listed below 10 resolutions that would help you to be financially wiser and hopefully a little more wealthier at the end of 2015.
(1) Draw up a budget: List all the major and minor expenses like groceries, insurance and taxes. Make sure you provide for them through your income alone.
(2) Reduce your debt: The interest paid on debt is a drain on your wallet. Pay off expensive debt like credit cards as early as possible. Avoid incurring debt to meet expenses, except for major expenses like purchase of a home.
(3) Cut down on non-essential expenses: Cut down small expenses like reducing the number of cigarettes you smoke daily or walking rather than taking a vehicle for short distances may seem insignificant initially. Although the savings, over time would result in not just reducing costs but also make us healthier too.
(4) Save before you spend: Most of us save what is left over after the expenses are paid for. But Sachin D, CEO, CFOSME Corporate Services advises that one should regularly save and invest about 10-25% of our income, in a disciplined manner. ``The balance after savings should be used to meet expenses,'' he says.
(5) Do proper research before investing: ``Investors need to do adequate research before they invest. They should be very clear what products they are investing in and why,'' says Rajeev Kumar, chief & appointed actuary, Bharti Axa Life Insurance Company.
(6) Know your Risk Appetite: ``Investors should be aware of their appetite for risk and invest accordingly,'' advises Kumar.
(7) Be committed: ``Investors need to be committed to their investment plans,'' says Vinod Sharma, Business Head – Private Client Group, HDFC Securities Ltd. At times, investors start and stop investing in SIPs based on performance of the stock markets, which is not advisable.
(8) Do not be greedy: Often investors keep waiting for stocks to move higher and higher, when the markets are bullish. ``Investors should resolve that they will not hesitate to book profits when target is achieved,'' cautions Sharma.
(9) Keep the portfolio balanced: At all times, the portfolio should be balanced as per our individual goals. ``This is necessary to avoid over exposure to any one asset class,'' says Sharma.
(10) Invest long term, do not trade: Despite the temptation to make a quick buck, investors should resolve not to trade. ``If at all you are a compulsive trader, then make sure you put a stop loss before you put a buy order,'' he adds.
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