Have you thought about how would you like to deal with your personal finances in the coming year?

If you have not, then now is the right time as the beginning of a new year is the most popular time to set goals and make plans, and everyone’s resolution list should include a few financial resolutions. Resolutions, like goals, are best when they’re specific. When you set a resolution or a goal, think of it as choosing a destination for your next road trip.

But before you begin your road trip you pack your essentials, so similarly make these financial resolutions to steer you towards your destination – financial freedom.

1. Engage in Budgeting exercise to increase Savings

   
   Make a list of the necessary expenses, curtail your impulsive spending and engage in a prudent budgeting exercise. This will increase your savings and enable you to make prudent financial decisions.
   Ideally, as Warren Buffett says, “Don’t save what is left after spending, but spend what is left after savings”.

2. Reduce debt burden

   
   Avoid taking any additional loans and keep the usage of plastic money to a bare minimum level for your long-term wealth creation benefits. Try to reduce your existing debt burden and in timely manner so that you can save and invest more for your peaceful future.

3. Create a financial plan

   
   If you create a goal-based financial plan that includes your aspirations of owning a car and house, your children’s future needs, and financial freedom, you will get a bird’s eye-view of what you want to achieve in your life and your financial standing.
   The financial plan must be comprehensively drawn. That means it should be

   • Smart,

   • Measurable,

   • Adaptable,

   • Realistic and

   • Time-bound.

         [Read: How to Set S.M.A.R.T Financial Goals]

   As per your financial plan, cautiously decide which investment assets or a combination of assets can help you in achieving your end goal fastest. Choose the right asset mix to build a balanced portfolio to diversify your risk associated with different asset classes, i.e. equity, debt, and gold.
   
   Ensure that you chose the right investment strategy based on personalised asset allocation depending on your risk profile. Investing for the future is to not be aped because your risk appetite and risk tolerance levels differ from someone else.
   
   [Read: Why You Should Not Ignore Personalized Asset Allocation While Investing]

4. Pay yourself (invest)

   As you know, wealth creation takes time. Hence if you invest in Systematic Investment Plans (or SIPs) offered by mutual funds via direct route you will build a bigger corpus over the long term. SIPs too work on the simple principle of investing regularly.

   Here are 5 key benefits of investing via SIPs:

    

5. Build a contingency fund

   
   Be prepared for the unexpected and uncertain events and situations that may crop up in your life. Such instances will burn a hole in your pocket that may tamper with your other financial goals.
   Hence ensure that you have a contingency fund that will not derail you from your goals.
   
   [Read: Have You Built A Rainy-Day Fund Wisely?]

6. Have a safety net

   
   Sudden, untimely demise can be an emotionally and financially traumatic for your family members. So, ensure that you are optimally insured to safeguard the interest of your loved ones and dependents.
   To know the optimum insurance you require, try the PersonalFN’s HLV calculator.

7. Save tax

   
   If you want to save tax and get exemptions, adopt in a tax plan. Tax planning is a holistic exercise that includes accounting for all payables, permissible exemptions, deductions, and reliefs available under the provisions of the Income-Tax Act.
   
   And mind you, there’s more to tax planning under Section 80C of the Income-Tax Act, 1961. So, take assistance of a tax expert and legitimately use the provisions of the Income-Tax Act.

8. Stick to your personalised financial plan

   
   Abiding by the financial plan is difficult when there are many distractions, news, suggestions around. But investments are not to be mimicked as one man’s meat is another man’s poison. Each person has a different investment strategy based on an individual’s risk profile.

9. Review the plan

   
   Reviewing the plan always keeps you aware about your financial journey and stay focused. Hence, keep a track and review your financial plan quarterly.

10. Seek professional advice

    
    A professional advice goes a long way in helping you start a wonderful journey of wealth creation. Sometimes you may overlook certain aspects when you create a plan on your own or lack some skill- set. Therefore, it is advisable to take expert advice.
    
    You can reach out to PersonalFN's Financial Guardian on 022-61361200 or write to  info@personalfn.com.  You may also fill in this form and our experienced financial planners will reach out to you. PersonalFN is a SEBI registered investment adviser. We will be happy to help you.

To conclude…
This year take a pledge to start a journey of wealth creation with Financial Goals and lead a healthy prosperous life.

Wish you a very happy & prosperous New Year! 

PS: Our latest exclusive report 5 Undiscovered Funds carries 5 unpopular funds picked by our research team. These funds have high growth potential, but are still not seen on the radar of most investors. A few years later, you might regret ignoring them.Get access to this report right now…
 

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