Every New Year, you try and make at least one resolution
for the coming year. This New Year, I would recommend you to make some
financial resolutions, to keep yourself financially healthy.
Buy adequate life insurance cover:
Buy life insurance cover equal to
10 to 12 times of your annual income. Buy online term plan since they are the
cheapest. By paying a small premium, you can get a high sum assured life insurance
policy. Do not fall prey to traditional insurance plans or ULIPs.
Buy adequate health insurance cover:
With increasing medical costs day-by-day, it is necessary
to have adequate health insurance cover. Buy individual health insurance cover
of at least Rs.3 lakhs for each family member / anyone who is financially
dependant on you. Do not rely on employer provided health insurance.
Invest in Mutual
Fund via SIP:
You should never try to time the market and invest in
equity directly. It is advisable to invest in equity mutual fund via Systematic
Investment Plan (SIP) for long-term financial goals.
Build Contingency
Fund:
Maintain a Contingency Fund equal to 3 to 6 months of
monthly expenses including household expenses, insurance premiums and EMIs.
Invest this fund in Liquid / Ultra Short-Term Funds. This money should be used
only incase of emergencies such as job loss.
Use Debit Cards
instead of Credit Cards:
You should avoid using Credit Cards and try using Debit
Cards. Credit Card should only be used incase of emergencies such as
hospitalization. If you use your Credit Card, make sure you pay the dues within
45 days. Using a Debit Card is best option, since you are using your own money
lying in your bank account and not taking any additional liability.
Review your investments periodically:
You should review all your
existing investments periodically (preferably quarterly). Make sure, you
maintain a proper asset allocation. You should make sure; your investments are
performing better compared to their respective benchmark index and beats
inflation.
Prepare a WILL:
It is always advisable to prepare a WILL, in order to
inherit all your investments as well as personal assets easily to the
respective beneficiaries whom you wish these to inherit; without any conflicts
among the family members.
Seek professional
advice:
If you think making all above resolutions is not your cup
of tea, then you should approach a Certified Financial Planner and seek
professional unbiased advice. Financial Planner will help you prioritize your
financial goals, recommend you adequate life and health insurance, review your
financial plan and investments periodically, so that you can have a healthy
financial life.
Published in: Moneycontrol.com
