New Year Challenge For Financial Safety
Every year we make resolutions for the New Year with hopes
of implementing them throughout and disciplining our life but we fail to do so.
We make resolutions for our health, education even for new adventures and
various other things but we forget a very important aspect around which all our
other needs and goals revolve- capital. Here is a step-by-step plan you can
implement to secure you financially without too much hassle:
1. Budgeting:
Accomplishing any financial goal requires a rigid budget and one must stick to
it. Keep a track of all the expenses and compare them to your initial budget
plan. Compromising on your budget means compromising your financial safety.
Eliminate impulsive purchases and emotional buying; it is the death of a budget
plan.
2. Debt reduction:
Paying debts scoops out a major chunk of the earning and it will ripple your
financial planning. Debt is like a cushion between your financial safety and
you. Taking a debt should be your last resort. If you have existing debts try
to pay them off first before indulging in other spending activities like buying
jewelry or electronics and vacations.
3. Emergency fund: When
we think of an emergency fund the first thing that comes to our mind is health
emergencies but it is more than that. An untimely loss of a job could be one, how
will your family and you survive till you get another job? For how long will you
be able to sustain if you do not have a job? Are you financially prepared to
endure any health expenses in that period? An emergency fund will help you
survive in such difficult times. Treat it like a long term investment and
forget about using that money except in extreme circumstances.
4. Increase income:
Strategize ways to invest your existing earnings to use in such a way that they
increase your income. Sell the unwanted stuff, lease the assets on rent and use
the rent money for investments that give quick returns. Create sources of
passive income like investments in stocks and bonds. To know more about
increasing your income and being financially safe attend our session on The
Financial Well Being.
5. Risk cover: Life surely
throws a lot of unexpected surprises at us. As humans are evolving we keep
coming up with efficacious ways of safeguarding ourselves in many ways.
Insurance is one such fundamentally essential necessity. A person should have
both health and life insurance as both vary in features. Maintain an insurance
calendar that will remind you about your dues.
6. Learn about tax saving: In India
PPF, NPS, EPF, Life insurance, tax-saving mutual funds (ELSS), bank FDs and
housing loan repaid among others are investments that can legitimately help you
save on your taxes and you have more disposable income in hand.
7. 50-20-30 rule:
This is a universal rule where you spend 50% of your income on needs, 20% on
wants and 30% on savings. Here again, you have to stick strictly to the budget.
Consider this as a spending diet. Scale down on your spending and prioritize what
is essentially needed.
8. Long term investments:
The goal of any long term investment should be growth, safety, and creation of
wealth. Know your appetite for risk before investing. Higher the risk, the higher
is the rewards. Instead of setting aside an amount make an automatic transfer of
payment at the beginning of the month so that you don’t spend it in
non-emergency situations.
9. Minimizing liabilities:
Cut-down on the usage of credit cards and make sure you pay the bills on time
to avoid the mess of additional fines that will hamper your budget leading to
an imbalance in the savings amount.
10.
Investment for retirement: Planning your retirement whilst saving is crucial
because you will need your savings after your retirement more than ever. Invest
in retirement plans keeping in mind the income you will require once you are
not working. Depending on your lifestyle. Identify sources of income, estimate
expenses, implement a savings program, and manage assets and risk.
11.
Spending less on depreciating assets: Assets like cars, motorbikes, electronics which are
expensive and if taken on EMI can go up to years of paying back with interest
added is something you should spend less on since their monetary value
decreases with time.
12.
Chart out your goals for the next year: Once you have tried these options you get an idea of
what you are capable of. Push yourself a little harder for the coming year. Set
higher targets to save and invest more. That is how you will achieve financial
safety for the foreseeable future.
We
worry about our finances but we do not take the corrective measures to secure
them. We at Sushil Finance have come up with a new challenge, try to apply
these in your day-to-day life in a cumulative pattern and see the change. After
a year you can eliminate a few steps and adapt a few best-suited ones to
accomplish both long term and short term goals.
Shahera Qureshi
Sushil Finance
Has rich experience as a content writer. She has worked with Bombay Stock Exchange (BSE) and has graduated in BMS. She is an avid reader and has impeccably proficient research skills.