Harsha Sinha was a bit upset over his financial achievements during the earlier year despite setting clear-cut resolutions. He had not achieved many financial goals mainly due to financial reforms that happened during last year. He was all the more upset to attribute financial happenings in the country as reasons for his own failures to achieve his financial goals. He decided that he will not allow himself to experience any such sort of guilt next year same time. He started working on his financial goals for the year 2018.
Setting financial resolutions for New Year is only the first step towards financial success. However, monitoring the same post-execution in a periodical manner will help achieve resolutions one after the other in a streamlined manner.
- Budget creation and finance mapping
Harsha decided to set budget creation and mapping his finances as his first resolution for the year 2018. Harsha knew this was going to be a tough job yet he realized this was the most important resolution he can have for the New Year. He knew that setting this resolution will help him track many aspects of his finance on a monthly basis. Some such aspects are taking into account monthly EMI’s, contingency and regular expenses. Budget creation will also help Harsha assess the efficiency of his assets and investments in terms of profit earning, liabilities and claims. This activity will help him plug in loopholes if any.
- Savings target is more important than Expense target
Harsha, out of his sheer curiosity, walked through his last year’s budget and felt flabbergasted. Like most of us do, Harsha realized that he was spending more time in fixing his expense target rather than the savings one. He decided that he will fix his savings target this New Year. He felt happy that he would be able to save 150% more than what he was actually savings the previous year owing to this change in approach.
- EMI Syndrome & high-cost debts
The next major resolution he wanted to focus on was to pull him out of the high-cost loans he was plugged in. Harsha realized that whenever he got a salary increase, it had become a habit for him to go for a high-cost loan. This was constantly keeping him in an EMI syndrome month on month. He decided that the next time he gets a salary increase he will settle one or more of the high-cost debts like credit cards and Personal loans. This will not only help him to increase his savings aspects but will also help him handle other low-cost debts like Housing Loan and Car Loan with ease.
- Financial plan for long-term goals
Like most of us do, Harsha had also been focussing on short-term goals every passing year. This meant he had not invested in long-term assets during the previous years and he was aging. Now that the first three goals have been set in a concrete manner, Harsha felt working on the basics for this fourth resolution would be easy.
- Having a knowledgeable financial advisor
Harsha pondered over the mistakes he did during the last year over his financial decisions. One main point he realized was that he did not have a Personal Financial Advisor. He had taken most of his crucial decisions pertaining to his Finance based on the advice provided by brokers, Mutual Fund advisors, and his Charted Accountant. Since these professionals addressed only specific aspects of Finance and did not look at his finance in a holistic manner, his resolutions toppled down. Harsha decided he will seek the guidance of a Financial Advisor to plan his resolutions for the year 2018.
- Building emergency fund for contingencies
Harsha understood that he had spent some major amounts on contingencies last year which took a toll on other aspects of his financial achievements. He decided he will take into account contingency or emergency requirements as a separate resolution for 2018. This, he felt, will save a lot of his finance on other aspects not acting as a hindrance to achieving resolutions pertaining to the same.
- Estate planning and Will creation
For a long time now, writing a Will allocating the assets to all concerned through the same is considered a taboo at a young age. The emotional aspects of a typical family fail to encourage the activity which is, in reality, the most important one. Harsha decided he will plan his estates through drafting a Will during his resolution planning for 2018.
- Adequate Insurance matters a lot
Harsha understood that he had not committed any mistake in taking Health and Life cover policies in adequate during the previous years. However, he realized that he need to focus on Term Policies since that would help him manage risks in a more efficient manner than earlier years.
- Benchmarking portfolio performance
Another finding that stunned Harsha was his investments in products like Fixed Deposits and Recurring Deposits that in no way was near to the pace of inflation. He decided that this will be one of his New Year Resolutions. He focussed in diverting his finances to venues that match up with the pace of inflation.
- Financial fitness is equal to Physical fitness
Harsha was startled to note the amount that was spent on junk food and health issues caused by the same during the earlier year. They played a significant role in eating up his resolution achievements. He decided he will cut on such expenses during 2018 and march towards achieving his financial resolutions for the year.
- Act on the above 10 resolutions immediately
Harsha noticed that he had postponed implementation of his resolutions during the earlier years. He decided he will set out on action plan for all the above resolutions during the New Year 2018.
- Have complete control over your savings and expenses by creating a Budget
- Ensure you allocate separate funds for exigencies so it does not eat up your savings
- Ensure your savings and investments fetch you the maximum returns
- Start executing your resolutions right from the first day of the New year