It is again that time of the year when you resolve what important things you will strive to do in the New Year. There might be that exercise plan that you wish to start or the diet that you have been delaying for quite some time. I propose that you add 4 financial resolutions to that list if you have already not done so. Most of us are aware that we need to be on top of our personal finances, but many of us fail to do it. In many cases, it is lack of time. Hence, these 4 pointers would help you lick off the inertia and help you get started
- Create an Emergency Fund
Emergencies come announced and we need to be prepared for it. One of the ways to be prepared for it is to have an Emergency Fund. This fund should be at least 3-4 X of your regular monthly expenses. It can be used when you urgently require the funds without having to break your long term investments. (which might not be quickly converted into liquid cash).
- Get Health Insurance for all family members
Medical care is becoming more expensive every year due to inflation and a hospital bill could really dent into your savings. The best way to protect against many illnesses is to follow a healthy lifestyle. However, in case you or any of your family members need to be hospitalized, it is advisable to take a health insurance policy wherein the insurance company reimburses the bills. It will not only give you mental peace, but also keep your savings to be used for critical goals. Choose a family floater policy based on the size and profile of your family
- Buy Term Life Insurance
The death of the earning member of the family is a huge emotional loss for the family. And, no one can deny, that it also means a huge financial loss for the family. The family should still be able to have the same standard of living as well as fulfill life’s critical goals. The earning member should have adequate sum assured in the form of a pure term policy. The policy should be taken till the working age of the members.
- Start a Monthly Investment Plan
Start a regular investment of at least 10-20% of your income to build a kitty for your future goals. The best way to do this is to automate it with the help of a Systematic Investment Plan of Mutual Funds. Compounding of returns is considered to be the eighth wonder of the world . The sooner you start, the more time you give for your investments to compound and grow. Also, you can have a good allocation to long term investments like equity. This ensures that you will have sufficient funds ready when your goal falls due.
Read now- Navigating Financial Success: A Deep Dive into Goal-Based and Cash Flow Approaches