Financial resolutions for 2022

The start of the new year is a great time to make a fresh start. Resolutions abound from getting fitter to reading more, from reducing the time spent on social media to learning a new skill. Embrace this season of hope and fresh starts by setting financial resolutions to improve your finances. 

Resolutions to Keep This New Year

Resolution 1 - Update Your Financial Goals 

Your financial goals form the base of your future spending and investments. When was the last time you reviewed them? If it hasn’t been any time recently, then maybe it is time for an update. Make your financial goals are as clear as possible. For example, it could be as specific as “I want to be out of credit card debt and I want to save Rs 50,000 by the end of the year”.

Resolution 2 – Budget For the Long-term 

A well-planned budget is key to achieving your financial goals. Review your current debts, savings, and investments and set up a long-term financial plan. Review your past spending over the last few months. Also, make accurate projections for future income. You can use the 50-30-20 rule to plan your budget where 50% of your budget should be allocated to essentials, 30% on savings, and 20% on non-essentials or ‘wants’.

Resolution 3 - Save Every Month 

An important aspect of your budget is understanding how much you plan to save. You must plan for exigencies, so you must plan how much you intend to put in your emergency fund and your savings. Put away something every month regardless of how much or how little. Make sure to choose a savings account with great features. For example, the IDFC FIRST Bank Savings Account has monthly interest credits with an interest rate of up to 5%. Such features ensure that your savings are not lying idle, but they are also bringing in some income.

Resolution 4 - Invest in Your Career

We tend to think of investing from purely a financial aspect, but you should also invest in yourself. One way of achieving it is by enrolling for vocational training. An example of this could be taking a course to hone your skills in a particular IT software. A solid career training course could set you up for bigger responsibilities, a better role, and subsequently, a higher income. Your financial planning should include investing in your career goals in the coming year.

Resolution 5 - Re-review Your Short-term Payments 

After setting up a financial plan, take some time to review your short-term payments. So often, we miss areas where we could be spending more than necessary, and we don’t realise it. For example, this could mean reviewing all your subscriptions. Your account may be getting deducted for a service that you used once and haven’t looked at again. Check all auto-payments you may have set up. Take a second look at all short-term payments and eliminate or reduce any extraneous ones.

Resolution 6 - Start Investing 

If you haven’t already, start investing today. When it comes to investing, the earlier, the better. It is the best way to build your wealth for the long term. Look at building a well-diversified investment portfolio; this could look like investing in stocks, bonds, and mutual funds. Or it could mean only creating a diversified mutual fund portfolio. Evaluate your risk profile and invest wisely. This is an area where the help of a financial advisor can make all the difference.

Resolution 7 - Maximise Your Credit Rewards 

All too often, you use your credit cards and generously rack up credit card points or rewards. However, we often forget to utilise them. You have earned those rewards, don’t let them go to waste! So the next time you go shopping or travelling, check if there is a discount of some kind available through your credit rewards.

Resolution 8 - Re-evaluate Your Insurance

If you don’t have insurance or you rely on your employer’s insurance, maybe it is time you got yourself adequate insurance cover. The Covid-19 pandemic has shown how important it is to have health and life insurance as protection. If you do have insurance, re-evaluate them. See if they offer you the best protection or if you can get something better at perhaps, an improved rate. Protect your financial and family’s future with wise insurance choices.

Resolution 9 - Pay Your Debt 

You may not be able to reduce your debt to zero, but you can try to minimise it as much as possible. Work out ways you can comfortably repay any outstanding credit card balance, EMIs, and so on. Try to avoid taking on any extra debt over the coming year. Only spend as much as you can comfortably repay. Consider consolidating debt from multiple sources under one loan, which will swap multiple interest rates for a single lower one.

Resolution 10 -Review Your Credit Report 

Do take a look at your credit score and work out what may be bringing it down. Things like applying for credit cards or loans or not paying your EMIs on time could be the culprit. Strive to repay any bills on time and follow up with the credit bureau on anomalies on your credit report.

Resolution 11 - Reassess Your Retirement Savings 

Many people leave thinking about retirement savings for the future. But similar to investing and insurance, the sooner you start, the better. Inflation eats away at the value of money, so traditional saving schemes may not cut it. Look for ways to save, such as pension accounts that account for inflation. 

The Bottom Line

The new year is an opportune time for you to set clear and defined financial goals that will have a lasting impact on your life. Be realistic, practical, and cautious. Avoid extremes as it will be harder for you to achieve those goals. You can even set up a checklist to track your progress and make any necessary changes.

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.