New Year brings with it new beginnings and optimism. A lot of people like to usher in the New Year with resolutions that they eventually end up breaking. Many of these New Year resolutions revolve around personal finance since financial well being is an important aspect of life. A lot of people usually fail to maintain such New Year financial resolutions because they over complicate their resolutions making them hard to maintain.
Before making your resolutions for 2014, the most important thing you should do is to review your current financial status. Here is a quick check for making a simple and achievable New Year resolution for anyone irrespective of earnings and expenditure.
Apart from improving the overall financial health, this can help you take smarter financial decisions in the long term.
Review your investment portfolio: Reviewing one’s investment portfolio by the end of the year is one of the best steps for taking a good investment related resolution. While reviewing the overall investment portfolio, one must ask some basic questions as to how risky the investment portfolio is and explore the adjustments where required. If you are single and have started working only recently, you can afford a riskier portfolio compared to married people with families. One thing that is common while evaluating your personal investment portfolio for the year is to always maintain a balance between long term goals and any emergency requirements for a rainy day.
Pay off Debt: Paying off old debt is one of the best ways to usher in the New Year. Budgeting and paying off old debt might not be as difficult as it may appear and only require a principled approach. One can set up accounts to automatically deduct monthly expenses. Get out of the old debt trap to increase the chances of improving your financial health in the coming year.
The best approach is to start by paying off the debt with higher interest rates like credit cards and personal loans. If you have some surplus cash, you may also consider paying off loans as pre-payment instead of paying EMIs. The best way to resolve pension debts is to keep a lookout for better interest options in the market to reduce the total term of the home loan thereby saving on the interest cost. You can use the additional pay outs you received this year like bonus, incentives, LTA etc for paying