The budget is very important to prevent wasteful expenses.
Financial Resolution in 2021: The new year 2021 has started. In the new year, people take the resolution of what to do and what not to do this year. In a way, it is like a goal in the new year. Similarly, by taking financial goals in the new year, you can not only meet your future needs but can also solve the cash problem for emergent needs. The Corona epidemic has taught many lessons that can help in obtaining financial resolution. The most important thing is that in 2021 this year, a budget should be made to curb wasteful expenditure. In this way, you can stop your wasteful expenses and save capital for investment.
Create a budget and follow it
Most people have a habit of spending and some people spend on such things which could have been saved. In such a situation, the decision to prepare the budget is very important. It is not enough to just prepare the budget, it is also necessary to spend accordingly. Wasteful expenses can be avoided by this and you will have capital which can be invested somewhere.
Build an emergency fund
The Corona epidemic has affected people worldwide. Many people have lost employment, due to which they had to face financial problems. One should be prepared in advance for any such situation. How much an emergency fund should be, it varies for everyone. According to Tareesh Bhatia, a registered financial advisor at SEBI-registered firm Advantage Financial Planners LLP, if you have health insurance, you should prepare an emergency fund to meet your financial needs for at least 12 months. Health insurance should also be at least 10 lakh rupees.
Repay the loan as soon as possible
Another important resolution in the new year is that whatever debt you have, repay it as soon as possible. If there is a delay in repaying the debt then it will continue to grow and as a result, the financial situation will be affected for a long time. In such a situation, if you have taken a loan, then try to repay it as soon as possible.
Long term savings plans
It is right to make plans for the present as well as the future. The sooner you start investing, the more time you will get to create financial funds for the future. Apart from this, insurance policies are also cheaper at a young age, in which case the burden is reduced on you. The benefit of making financial plans for a long time will be that even small savings will become big in future. Through this, preparations can be made for any major future expenses like children’s marriage, studies, business etc.
Increase financial understanding
Take this resolution in 2021 this year that you will try to increase your financial understanding. We will try to understand what is the debt and equity market and how you can benefit from investing in it. This year, try to increase understanding about the benefits of investment through Systematic Investment Plan (SIP).
(Note: The report is based on a conversation with Tareesh Bhatia, author of the Amazon bestseller book The Richness Principles.)