TOP 5 FINANCIAL RESOLUTIONS FOR NEW YEAR 2019

2018 is approaching to end and it is time to make new resolutions as we witness the dawn of a new year. Though some resolutions may be treated like most are – forgotten about – there is one aspect in which they should be considered seriously: the financial domain. This is so because our financial well-being is closely connected to a sense of security, fulfilment, and mental peace.

Designing SMART resolutions

Like other resolutions, your past financial resolutions may have just been on paper and may have never come to fruition. So it is important to think about them differently in the upcoming year to achieve your objectives. Or in other words, be SMART (Specific, Measurable, Attainable, Realistic, and Time Sensitive) about them.

• Specific - You should be able to write your resolutions down with precision. For instance, ‘I am going to save INR 10,000 every month in 2019.’ If they cannot be specified, resolutions are near impossible to achieve.

• Measurable - The specified goal previously mentioned has a numerical value attached to it and can hence be measured monthly. A goal without a measure is akin to a rudderless ship – it would go nowhere.

• Attainable - Do you have the capacity to invest X amount to achieve Y amount? If your spending habits do not augur well for a surplus amount, then the goals will be not attainable.

• Realistic - So while desiring to make more money in 2019 than a 1-year bank fixed deposit rate is achievable, hoping to triple your money in 2019 itself may not be. So, make sure that the resolutions that you frame are realistic.

• Time Sensitive - Even those financial objectives, which are far out in the future can be broken down into yearly milestones and assessed. Hence, it is important to time bound your resolutions.

Top Financial resolutions to consider for 2019

After setting goals under the aforementioned framework, let’s look at the top 5 resolutions you can aim for in 2019.

1. Keep regular track with a money managing app - Technology has permeated our daily lives and investments are no exception. There are a plethora of web and mobile applications available, which help you track your investments, thus helping you keep a measure of their performance. These apps are user friendly with an approachable interface, which provide you an overview of your portfolio in one tap.

2. Save for retirement - The importance of saving for a rainy day cannot be overstated. And when it comes to retirement, saving (and investment) assumes even more importance. If you’re young, retirement may seem decades away and saving for it may seem unnecessary today. But earmarking a portion of your salary and investing it for retirement is crucial in order for you to reap the benefits of compounding.

3. Diversify your savings portfolio - Spreading your money across and within asset classes is essential. A mistake many investors commit is not creating an optimum mix of stocks, bonds, non-convertible debentures, bullion, commodities, and funds. A concentrated portfolio either increases risk or diminishes returns or both. So, 2019 should be the year to diversify.

4. Work towards a promotion - Salary increases are hard to come by and smaller salaries lead to smaller portions towards savings and investment. A near certain way to increase your income is to work towards a promotion. Elevations in a job in quick succession not only bode well for your career, but they also increase your perceived value and provide more in terms of compensation, which can get you closer to financial freedom.

5. Plan ahead for vacation - One of the best uses one can put their money to is to travel. Visiting other cities and countries can not only be refreshing and relaxing but educational as well. Though it is no secret that vacations can be expensive, you can be smart about it and plan your travel ahead. Giving yourself enough time to plan can get you cheap tickets and places to stay and also allows you to create a mini targeted savings plan for the same, which can fund part of your travels.

How to keep your financial resolutions?

It is a step in the right direction when you put your financial resolutions for 2019 in place. But this in itself is not enough. It is important to ensure that you are on track with these resolutions and are able to see them through the year in order to be effective. There are certain ways you can do that:

• Automate your savings - In order to inculcate a habit of saving, you can decide to setup systems, which help you automate your savings. Apart from assigning a certain percentage (20% is a good number to begin with) to your monthly salary for savings, you can use a bank’s sweep-in facility. This will transfer your money into a sweep-in fixed deposit and then you can withdraw whatever you need for regular expenses. Also, you can setup SIPs in mutual funds, which will automatically deduct a specified amount of money from your bank account and invest it into a fund of your choice.

• Regularly track your progress - By making use of various apps, as outlined above, you can regularly track your investments. Similarly, you can setup a period, say once a month, or more specifically, your salary day, to ensure that you are on the path determined by your financial resolutions.

• Motivate yourself - A closely associated point to the above is to continue motivating yourself. You need to constantly remind yourself that even if your financial resolutions cause you short-term pain as you may need to cut down on your discretionary expenditure, it is for a greater good in the long-term. If some sacrifice now makes for a rosy future, then that sacrifice is worth it.

This article has provided you with a few pointers, which will help you set SMART financial resolutions in the upcoming year. You can explore the resolutions mentioned herein and add a few others, which may be specific to you and can help you become financially fit in the next year. And do remember that sticking to your resolutions is sometimes more important than just making them.