Every new calendar year brings with it a sense of fresh start in our lives. So customarily we tend to make new resolutions through which we fool our own selves into believing that we will change for the better. But as most of you must have realised these resolutions last at best till the euphoria of New Year celebrations is over. So instead of making new resolutions wherein we promise to do certain things, let’s do something different that is resolve not do a few things (financially) this year.
Resolve not to keep money idle.
Almost everyone who holds a bank account maintains balances far greater than the minimum balance warranted by it. The logic is that one likes to the have cushion of liquid balance to suffice their needs. But what we don’t realise is that beyond a certain level this money lies practically idle without generating any income from it. Through my earlier articles I have highlighted the importance to liquid funds issued by various mutual funds, wherein the investor can park excess funds lying in savings/current accounts to gain higher returns without affecting ones liquidity. This way not only will you give yourself an opportunity to earn more money through greater interest rates but this will also help you to swipe away balances from your bank so that you can avoid impulsive spends from your account.
Resolve not to remain financially illiterate
Very often I have come across people who have invested on hear- say basis only to find themselves in a spot of bother because they believed in unsolicited advice. It’s similar to a child copying in exams thinking that their mates would know better. But isn’t that a big risk to take? The better option would be to study on their own and put ones fate in own hands. There is always a first time to learn things we don’t know, the first time you learned to ride a bicycle must have been tough too, with every fall, bruise and pain you went through you eventually learned to balance yourself and get though the task. Similarly understanding finance may seem complicated in the beginning but as your knowledge grows, you will feel more confident to take financial decisions on your own.
Resolve not to get over insured.
People tend to think of insurance as an investment and at times go overboard insuring themselves. Insurance cover is essentially a contingency plan that comes to our rescue should the need arise. For example ‘Term Insurance’ cover whereby sum assured is paid to the nominees of the insured in case of their death or a Mediclaim cover whereby in case of any illness money is paid/reimbursed to the policy holder thereby saving financial distress. These two policies are a must for every individual. But with a deluge of insurance products being sold by agents who gain substantial commissions very often people fall prey to their marketing gimmicks and end up buying schemes they could very well do without.
Resolve not to lose patience
I follow a mantra that success is a result of patience and perseverance. When a tree is planted, initially it needs a lot of care to survive, slowly it begins to grow and its roots spread deep in the soil to establish a firm grip, its branches reach for the sky and over a matter of time it develops into a fine fruit bearing tree that feeds many generations. My point is that when we make financial/investment decisions one should look at a long term horizon, this way not only will the returns be higher but you will be able to enjoy the fruits of compounding.
Conclusion
The only constant in life is change, so resolve not to remain static and enjoy life to the fullest. So cheers to a new year and another chance for us to get it right.
