10 Best New-Year personal finance resolutions for you

Naval GoelPolicyX.comYear 2016 has been like no other. The country is still to find steady ground after the kneejerk reactions that followed the 8 November demonetisation. While the number of people standing in queue outside the ATMs has reduced, liquidity is yet to return to the market. People, paranoid about how things will pan out in the near future, are stacking up money in their homes. That’s one of the most unwise things to do; letting your money gather moss.   If you are hunting for ways to have a healthier personal finance portfolio for the coming year, here are some resolutions that you can adopt for 2017.1. Square off your debtsDebt is the biggest culprit to impede your financial goals. Pay off all your bills on time. Clear all outstanding debts. Credit card debts command unusually high rates of interest that is compound every month. Try paying of your creditors in cash and save money on interests.  2. Save before you investMoney saved is money earned. It’s an old adage. Before you start investing, get into the habit of saving. Determine the modes of saving. Save money every month by cutting down unwanted expenses. Open a separate savings bank account and leave it untouched. Use the new account as a piggy bank.3. Straighten your records Most of our financial recordkeeping is in shambles. We don’t track the investments made over the years. Rarely do we keep the statements in one place. We are often unaware of where we are in the investment cycle, leave alone know whether the ones that are there, can take care of us in the future. In most cases, bank accounts and insurance papers don’t have nominees. In the event of an emergency, it’s often difficult to get the benefits. Other important details like address for communication and phone numbers may not be updated. Fill in these gaps and bring the statements to order to take stock of your finances.  4. Stop wasting moneyIt’s easy to be lured by the attractive offers at shopping malls, restaurants, and online portals. We are humans after all. Not only you will end up buying things that you don’t need, there’s a great depletion to your savings as well. Cut down on impulsive shopping. Instead, save money for financial crises and emergencies. 5. Plan a budget2017 is just round the corner and now it’s the perfect time to prepare a budget for the New Year. But more important than preparing a budget is following it. Besides, having a separate budget for consumption items can greatly help. Staying within the budget will ensure that your financial goals will be within your reach, and expenses as planned. Temptations lead to debts and problems in the cash flow. Keep you bank passbook updated. Find out your credit score to determine your financial status. Try improving on it. Update your budget regularly.  6. Employ your moneyDon’t let your cash lie idle in the bank. The conservative rate of inflation from 2012 to 2015 was 8%; which means, if your money doesn’t grow by at least that percentage, your savings are actually shrinking. It’s around time that you moved your idle cash generating a paltry 4% in a savings account and invest it. Parking the money in a fixed deposit will be the easiest thing to do. That’s the closest you can get to beat inflation.   7. Don’t invest in what you don’t understand While it’s important to invest, don’t invest at random, especially in instruments that you don’t understand. The relevant authorities are doing their bit to secure the investors. The finance ministry has an exhaustive range of dos and don’ts to prevent common people falling prey to unscrupulous investment scheme. The IRDAI too has completely overhauled the ULIPs. But it’s also your responsibility as an investor to be cautious and not buy a product which you don’t understand.    8. Update knowledge on e-fraudsExcept perhaps your house and jewellery, almost all other assets that you own can be accessed online or from a distance (known as skimming). With each passing day, people are falling prey to fraudsters in greater numbers. According to RBI reports, cyber fraud related to RTGS/NEFT transactions alone were estimated to be Rs 80 crore. So if you don’t educate yourself about frauds, you are probably committing financial hara-kiri.9. Build an emergency fundYou can’t insure all your risks. But you can certainly take precautions. The demonetisation has hit hard some sectors of the industry. Job cuts are also happening. While the phenomenon is unlikely to last over the long-term, an emergency fund undeniably helps if there’s a sudden halt in your income. A sum equivalent to six months of your salary is advisable.10. Save for your retirementYou should ideally start planning for your retirement the day you join your first job. But if you haven’t done that as yet, you can start from the beginning of 2017. Saving for your retirement will help you ensure financial stability when you are beyond the reasonable age of working. Invest in retirement plans like public provided fund, annuity plans, National Pension Scheme and others.   A new year brings new hopes and aspirations. It’s also the time to renew pledges. Start managing your money wisely. You will have a financially secure life.