By now you must have been over with your year end celebrations planning and it’s indeed a great opportunity to welcome 2016 by including some financial resolutions too. A first step towards happiness is being stress free & well managed finances always lessens half of your stress but just framing words for resolution is insufficient.
The need for setting up clear financial objectives along with flawless execution is just as vital; here are some tips and tricks to set your financial figures right as follows:-
Start with a review of your financial performance in 2015:
It’s time for doing some self-appraisal by asking yourself the following questions:-
- Did I accomplish my financial objectives last year?
- What was my income & Total Expenses both expected & unexpected?
- Did I pay my EMIs/Dues in time or any Late payments; if any?
- How much returns I made on my investments; did I exceed my target?
- Did I have any surplus money which was lying dead in account only?
- Did I touch my emergency fund or didn’t even create the one?
- Did I borrow any money and if yes then for what purpose?
- How did I perform monetarily in 2015?
Doing this self-examination will open up the ways to set your new year targets for accomplishing your Financial objectives.
How to set your financial goals & make resolutions for 2016?
You should make new financial resolutions based on the review of your last year’s financial performance as follows;
- “I will strictly follow my budget”
- “I will pay my EMIs/liabilities/credit card payments on time”
- “Optimize my tax saving investments”
- “I will save 20% of my total income”
- “I will start SIPs and also invest in new ways of investment than traditional ways”; and so on.
Here are some resolutions you can set for 2016 & achieve Financial Peace!
Know your financial health: Yes first important resolution is to analyse your financial fitness and check where do you stand in your financial life followed by a detailed plan with proposed income, savings & expenses in 2016.
Prioritize your expenses: There are expenses which are unavoidable & unnecessary and you need to priorities between your essential & luxuries by finding out the gaps & deciding thpse expenses which you can cut down.
Review & Reduce Debt: You can reduce your debts which has higher rate of interest & gives you a flexibility for prepayment or closure. Howevery you should always optimize your debt wherever it is possible like in case of a home loan which also offers tax benefit and thus overall cost of serving this debt can be lowered down.
Make your Monthly & Annual budget: Prepare a monthly budget & an annual budget with the details of expenses & income and review your budget on a monthly basis and following strict execution is the only key to success.
Emergency Corpus: If you don’t have an emergency fund, take a first step & start with the same in 2016. If you already have an emergency fund, make it stronger this year.
Pay your Dues in time: Do not pay any penalty for late tax payments or EMIs or credit card payments; you should make a due date diary and wherever possible set up auto debits.
Save more; save big: Let us make it big this year, increase your saving percentage & create a handsome corpus for future.
Systematic investment planning: Dead investments or savings with minuscule returns are a deterrent in creating wealth. Make a proper investment plan; diversify your portfolio. Calculate your needs, risk appetite & categorize you investment as follows:-
- Tax saving investments
- Life, mediclaim, general insurance policies
- Mutual funds, stock market investments
- Traditional investments
- Retirement planning
- Child education related investments
Joy of giving: Each one of us owe to our society & we should also make a pledge in the new year to contribute for the wellbeing of our society by contributing some part of our earning as well as time towards social upliftment.
Additional income source: Why not we think of adding an additional source of income; It may be your hobby or a skill which can help you generate that additional income.
Conclusion: Savings and smart Investents are simple steps to create long term wealth & assets for securing your future so make your yearly finance plan today and be stress free & welcome 2016 with a financial bang.
Happy Financial Year.