The new year is around the corner. Every year we take up resolutions to improve our life. Some may be big and some small. But when it comes to finance, let us start with simple resolutions.
1) Increase your contribution at 1% to 5% to each financial goal yearly.
An increase of 1% to 5% seems to be very little. However, when we think of the power of compounding, then it creates a lot of difference. Especially it is for your long-term goals. So commit this increase each year by 1% to 5% and see the magic in the end. I know it is meager amount. Still each year if you increase then you may not feel that much heat after few years.
2) Be concerned about your finance but not worried.
People tend to say that why to worry for small money matters. However, do not be worried; instead be concerned about money matters. This concern will automatically take away the worries. So be concerned about each financial decision you take today, how you want to share your finance in the future and be in the driving seat of your finance.
3) Each time targets one loan only for pay off.
If you have so many loans like housing loan, credit card loan, vehicle loan, or personal loan, then concentrate on small loan first to pay off fully. Once that goal is fulfilled, then concentrate on next. It does not mean that you stop paying EMIs, but closing of any loans will make your life easier. So the mantra is to break your goals into small pieces and each time target only one.
4) Read good financial books.
Knowledge is like an ocean and especially about personal finance. It is so dynamic in nature that each day we come across new ideas. So try to select good financial books and start to read them one by one. By reading, you will come to know what mistakes you did, what is your current financial situation and how to build your future financial life.
5) Start to rid off free spending friends.
You spend more especially when you are with your friends. So list the friends who not care for their finance. Start to avoid them one by one. This automatically will reduce your spending. Along with that, other friends start to think in your way. If that free spending friend actually needs your true friendship then let him learn the basics of money matters.
6) Teach your kids about MONEY.
I already wrote a post on this topic. So just, refer this and start to teach your kid about money. This ensures good money habits and it actually guides them throughout the life of your kid.
7) Create simple habits.
These days entertainment for city life means visiting to malls, enjoying Pizza or Burgers and watching movies in Multiplex. Therefore, this automatically increases your entertainment bill and health issues. Instead, create some simple habits like painting, reading, gardening, going for long walks, listening to music or whatever you feel which encourages your mood and energize your mind and body. You must have some good habits, but such habits must not be costly too.
8) Be with friends who have similar financial goals or mindset about money.
Always be in a company of friends whose thinking matches with yours about money. This actually has an advantage as it automatically gives you a second opinion about your money. Exchange ideas with them what you did and what they planned. By doing so you are indirectly increasing your knowledge about money. So be social with like-minded people.
9) Start to exercise.
These days being healthy have so many advantages. One such advantage is saving money and enjoying your savings on last days of your life. So energize yourself to be active by being committed to physical exercises daily. Create a group who has similar passion. Read more about exercise and healthy lifestyle.
10) Commit yourself to spend less than what you earn.
Create a budget at the beginning of the month itself. Commit to it in such a way that spending never crosses income. I know few who earn high, but do not know where their money going or unable to find the holes.
11) Be serious with emergency funds.
Yesterday I came across a comment, where a reader asked my advice about investing his emergency fund in ELSS. What I have to say about this? So create an emergency fund immediately and at the same time keep it in such a way that it must be accessible easily for you. Never mind too much about return on this. Also, increase around 10% to 20% each year.
12) Switch off TV as much as possible.
These days the main idea of television is to grab the TRP. So to be top they can go to any extent. In addition, their main revenue source is advertising. Hence, you come to know about products mainly due to TV. These products may be NEED or WANT. However, you fool yourself by buying such things. A simple example is, how your baby come to know about any particular branded eatable, dress or mobile phones??
13) Be LAZY for shopping!!!
It has proven that people buy things emotionally rather than analyzing. So being lazy in your shopping decisions will give you some time to re-think your decision. By doing so you can easily avoid unnecessary shopping habit.
14) Always have a rear view mirror to your financial life.
Commit to yourself that you will not make the same mistakes of what you did in the past. Try to remember those mistakes for life long. Because mistakes are the best teachers in our life.
15) Be Transitional rather than transactional.
We always try to find a solution only when we face problems. This is called transactional. It means dealing with the problems which currently in front of you. Instead, look for a bigger picture of life. Do not be medicines to your diseases; instead create an atmosphere where you do not come up with any financial problem. Because prevention is better than cure.
Simple right? Let us commit from this new year 🙂
Image courtesy of [Danilo Rizzuti] at FreeDigitalPhotos.net