Financial resolutions for 2022

Every new year brings new goals and resolutions that help you set out on the right course to achieve your aims for the year. However, one area that is often forgotten about when making resolutions is financial planning. The sooner you gain control of your money matters, the closer you can be to living the lifestyle you desire. So, here are some financial resolutions for 2022 that can help ensure financial stability in the long run. 

Calculate Your Net Worth

Your net worth refers to the total value of your financial assets, including cash, real estate, investments, such as mutual funds, stocks, bonds, etc., that you own presently. The idea behind calculating your net worth as part of your new year financial checklist is not to judge your progress and compare it to others. Instead, the aim is to understand your growth and progress in terms of your individual goals. For instance, if you are saving for the down payment of your home, you can assess if your present net worth can accommodate this financial goal within the stipulated timeline. If not, you can make timely decisions to speed up your progress. 

Update Your Financial Goals

As life goes on and you get older, your goals also tend to change. Your goal at the age of 25 may be to buy a car. However, by the time you reach 30, this may change to purchasing a home. These altering goals must reflect in your financial plan too. This allows you to modify your investments and savings strategy and ensure that you are able to meet the financial goals you set within a timeframe.

Likewise, it is also essential to review your goals time and again and see if they hold any value in the present. For instance, when you are younger, your primary concern may be to travel the world. However, as you get older and have children, your gaze may shift to other critical goals like saving for your child's higher education. So, when putting together your financial resolutions for 2022, it would be wise to consider such developments so you can plan better for the future. 

Rebalance your portfolio

Portfolio rebalancing refers to the technique of bringing your portfolio back to its original target allocation. For instance, if your investments have been underperforming, you can rebalance your portfolio and shift funds to investments that show more potential. Rebalancing your portfolio can help you maintain your risk appetite and maximise the chances of earning profits. It ensures that your investment portfolio reflects your requirements at all times by correcting the asset allocation and bringing it to its original percentage. 

Review your credit report

Your credit report is a summation of your credit score and lists the reasons behind it. If you have a poor credit score, the report will contain the details of your repayment defaults, such as credit card dues, missed loan settlements, etc. If you have a good credit score, the same will reflect on the report. Reviewing your credit report can help you understand where you stand. Adding this crucial task to your new year financial checklist can give you a chance to act immediately and find ways to improve your credit score. This can help you plan future purchases and loans more efficiently. For instance, if your credit score is currently low, you can wait and build it up before applying for your next loan. This can increase your loan approval chances and could even mean slightly lower interest rates. 

Clear your debt

It is important to clear your debt to maintain a good credit score and not hamper your lifestyle. Mounting debt can make it hard to sustain your lifestyle and plan for the future. Moreover, it lowers your credit score and adds to your stress and anxiety. If you have any loans or pending credit card bills, try to make it a priority to clear them as soon as you can this year. 

Review and renew your insurance policies

Getting the right insurance policies can help prepare you for any unexpected situation in life. Therefore, having adequate insurance is a must for every individual. It is also important to remember that insurance premiums get more expensive as you grow older, so the sooner you buy them, the better it will be. 

The first step is to assess your insurance needs. For instance, if you have a life insurance plan, check if it provides the right coverage. If you have recently gotten married or had a child, you may want to upgrade this cover to ensure your loved ones will be sufficiently protected in your absence. This is especially important if you have ongoing debt. Your life insurance policy should be able to cover your family's expenses and any debt in your absence. 

Along with life insurance, another type of policy that should be an essential part of your financial resolutions for 2022 is health insurance. Given the current climate and the many related health issues people face today, it is vital to have a comprehensive health plan.

IDFC FIRST Bank offers term and health insurance plans that can secure you financially and take care of your loved ones in your absence. Partnered with leading insurance providers like ICICI Prudential Life, HDFC Life, and Bajaj Allianz, you can buy a term insurance plan through IDFC FIRST Bank and protect your loved ones. You can also check various health insurance plans to find the right fit for your needs. 

Increase your monthly savings

A new year can be an excellent time to draw up a new budget with a dedicated savings head. You can start the year by creating a budget and setting aside a fixed percentage for savings each month. This could either be a fixed amount, like Rs. 15,000 out of a salary of Rs. 50,000. Alternatively, it could also be a fixed percentage, like 20% of your monthly salary. The latter can be more helpful in staying consistent if you get a salary hike or a salary cut, as your savings will move up and down at the same pace and ensure that your future goals do not suffer drastically. Irrespective of what you choose, make sure that you save more than you did last year and use these savings for your future goals by investing them optimally. 

To sum It up

These are just some critical points you should consider adding to your new year financial checklist. There are several other things that you can do, like spending less, creating an emergency fund, trying to find ways to increase your income, investing more, etc. Remember that every individual is unique. So, pick those financial resolutions that you feel can help further your financial journey for a secure future and comfortable life.

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.