Articles

1. Have a budget and stick to it

Personal or house hold budget is an itemized list of income and expenses. The income may be of various headings like salary, rental income, dividend and interest income etc., The expenses like housing, personal, living, loans and children expenses. Having a budget helps to track the spending habits and will prompt in eliminating unnecessary spends. Though it may be difficult to maintain, but once you start, it becomes a practice.

2. Prioritize your loan/ Payoff credit card debt

List down all the loans, outstanding amount and the interest rates. Not all the loans have same interest rates. Have a top down approach on interest rate and close the one on the top. In most of the cases, the interest on credit card spends would take the top priority as the interest on credit card spent is between 30%-40%. The best way is to shed your fixed deposit, savings balance or the worst case scenario, take a personal loan to clear of the credit card outstanding. It is not wise to retain the fixed deposit that gets 6-7% interest and paying 30-40% interest on credit card outstanding.

3. Protection Planning (Life Health Emergency fund)

Check balance the life insurance coverage and ensure that at least 10 times of an annual salary is the minimum life insurance coverage one must have. Take a term insurance to cover the gap. This will not put the family under trouble when the family lost their bread winner.

Have an independent health insurance to cover the hospitalisation expenses. Though the individual have the coverage in office, this may be little enough, as the hospital expenses are sky rocketing.

The job change, job loss or sickness would trouble the regular monthly outgo like housing, EMI etc., Have adequate emergency fund to the tune of 6 months to 12 months expenses in a savings account or liquid funds which could be liquidated easily.

4. Aim to save 10% of income

Have a habit of saving at least 10% of the income in an instrument that provides a better inflation adjusted return. Start an systematic investment plan(SIP) in mutual funds.

5. Have only 2 bank accounts

Keep only 2 bank account and close all the other bank account. One may be a salary account and the other one can be a personal account. The banks are charging a hefty fees on non-maintenance of the minimum balance to be maintained in an account. Nowadays, lots of payment banks and wallets which offers lots of freebies and credits on usage. Make use of wallet payments.

6. Take a vacation

All along the year working for an organisation makes tiring and hence a compulsory vacation at least once a year. Make it as a habit which rejuvenate the body and soul.


7. Focus on Physical health

Healthy eating and physical activity makes a perfect man. Have a habit of doing any physical activity for an hour in a day. Try to remember the saying “Health is Wealth”. The loss of health leads to loss of wealth in many ways.

8. Read one financial book

In present days, the financial awareness is very less. Due to the ignorance, one may fall in the trap on buying useless financial products. Start this new year with the habit of reading one financial book in a quarter to understand the financial jargons. This helps in taking an informed investment decision.

9. Engage with a financial planner

Everyone has a different DNA. Similarly the needs of every individual also varies. Engage with the financial planner. List and prioritize the financial goals and take appropriate action on achieving each individual goals.

10. Donate to poor

Last but not the least, the joy of giving gives more happiness. Set aside at least 2% of the earnings to help the poor who are in need of education.

Wishing you a Very Happy and Wealthy New Year - 2018