Top 5 Financial Resolutions for 2016

Written on Tuesday, December 22, 2015
By Kumar Pushpraj

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We are all set to welcome another marvelous year and most of us have already listed down few resolutions for 2016. Getting physically fit, enrolling a gym, living our passion, improving social life, spending more time with family are some of the most common resolutions amongst youth, but there is something which gets ignored or we postpone it- Our Financial Health. This new year, let’s take 5 resolutions that would ensure a financially healthy year ahead.  

 

1. Start a Mutual Fund SIP- Create long term wealth

 

Mutual Fund SIP (Systematic Investment Plan) in a diversified Equity Fund is time proven formula for creating long-term wealth. It is most widely accepted solution for a variety of long-term goals like children's higher education, children's marriage, house purchase and retirement planning etc. SIP is most simple concept which can be explained even to a layman, housewife, and people with limited financial background.

 

To make life easy Mutual funds are one of the most investor-friendly investments available amongst all the market-linked investments. There are mutual fund schemes for every asset class, be it equity, debt, a mix of them or asset, such as, gold. This makes mutual fund suitable for meeting different goals, at different life stages of an investor.

 

2. Get a Term Plan- Secure financial future of your family

 

If you analyze your financial life, you would realize that your liability quotient is increasing with growing kids and ageing parents. This is not worrisome, it is just another phase of life but what may bother is the thought of uncertainties. Who would take care of your family's needs, if anything untoward happens to you? This new year, grab a term plan which best suits your needs. Term plan is basically a no frill insurance product that offers attractive life cover at a comparatively low premium. It is different from a regular life insurance product as term plan gives nothing back at the end of the term (life cover period) if you survive it.

 

Tomorrow even if you are not around, your family will not have to bear the burden of aspirations you will leave behind.

 

3. Think of your Retirement- Start early for maximum benefits

 

We all have a dream of financially sound and healthy retirement life, right? It may be as simple as sleeping late or taking an early morning stroll on a calm beach, or as daring as going to Himalayas for a bungee jump at the age of 65. Living your someday the way you want means having a proper plan in place. So, aim to save at least 15-20% of your pre-tax income every year, from age 25 or as soon as you start getting your regular paycheck. It should help ensure that you have enough income to maintain your current lifestyle in retirement.

 

Investments in NPS, Tax Free Bonds or a regular Mutual Fund SIP are some of retirement product options you can go for.

 

4. Manage your Debts- Stay on top of it

 

You have credit-card balances, car loans, personal loan, education loan etc. as most people do. The monthly payments can eat up a big chunk of your income. The key is to pay down the debt with the highest interest rate first, which is usually high interest rate credit cards. Consider paying more than the minimum each month. Check your credit card statement to see how long it will take you to pay off the balance—and how much it will cost. The statement usually suggests how much you need to pay each month to pay it off completely.

 

5. Have a Budget- Stick to it

 

Trying to lead your financial life without a budget is like driving a car without a fuel indicator. You’ll never know how long you can last without running out of fuel. If you start analyzing your current spending and saving based on three criteria- essential spending, retirement savings, and short-term savings, it can give you control and, perhaps as important, confidence. Undoubtedly, your financial situation will change over time. A budget is essential for both spending and saving. Once you know where your money is going, you can make an informed decision about how to deal it.

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