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Last Updated : Dec 28, 2016 04:12 PM IST | Source: Moneycontrol.com

New year resolutions for the financially fresh

The start of a new year gives us a psychological chance to make a new beginning. The belief that we can make a fresh start is very powerful and goes back in time.

Bhargavi Sridharan

A new year is around the corner, and most of us are looking forward to a break from work. Many companies have a slow-down or shut-down in the last week of December. Of course, some industries like tourism, entertainment, food & beverage gear-up for peak season. So whether it is a period of relaxation or hyper growth at work, this is a season of cheer and optimism.

The start of a new year, also gives us a psychological chance to make a new beginning. The belief that we can make a fresh start is very powerful and goes back in time. According to Wikipedia, “Babylonians made promises to their gods at the start of each year that they would return borrowed objects and pay their debts. The Romans began each year by making promises to the god Janus, for whom the month of January is named.”

The opportunity to clear our minds and give ourselves a new chance, should be used well. This is the reason why new year resolutions are popular.

Most Common New Year Resolutions

According to a study published by Nielsen, the top 10 new year resolutions in order of rank are:

As you can see, the items on the list are the important things that make life beautiful and worthwhile: good health, making time for hobbies, family & friends and being better with money.

The New Year Resolutions That Should be on your List this year.

Now, new year resolutions are all about improving yourself, your life and the world around you. Would that ever be complete without ensuring that you are financially sorted? Or at least being on the path to financial well-being? Or at the very least, taking baby steps?  

These three financial resolutions should be on your list

•    Resolution 1: Always spend less than you earn.

It’s that simple. But with credit cards, and holidays, and all those shopping deals, it’s tougher than it looks. Practise asking yourself these three questions before your buy anything:
o    Can I live without this? (Do I need this or want this)
o    Is there a possibility that I won’t use it regularly?  
o    Have I purchased anything similar in the past -  that is lying idle and wasted , or something that was not as useful as I thought it would be?

If the answer to any of the three is yes, then you don’t buy.

That’s’ how you can gain control over your spending.
•    Resolution 2: Set a savings target.

Pick an amount of money that you would like to have left in your bank at the end of every month.  Reduce this desired bank balance down by 20-40%. This is your savings target.

Now, don’t actually wait till the end of the month to achieve this saving. As soon as your salary comes in, move this amount to a recurring deposit or to a mutual fund SIP. Now your savings is done.

Even, if you ever slip-up on Resolution 1, Resolution 2 has your back.

•    Resolution 3: Act & Make ONE financial decision  

This is further to Resolution 2. The best way to get smarter with your money, is to start taking baby steps. If so far, you have shied away from all financial topics and decisions, this is the year to gather courage and take your first step.

Make a small financial commitment – whether it is a tax-saving ELSS or a term insurance, read-up about the options and alternatives, consult your friends, family and financial advisor, and then sign the paperwork. Small decisions help build your confidence for bigger decisions tomorrow like buying your own home, or buying stocks.

Now you are all set for making meaningful New Year Resolutions, that you can successfully achieve.

Wish you a great year ahead!

The author is founder of www.finmitra.com, an automated personal financial advisor.
First Published on Dec 28, 2016 04:12 pm