In my 3 short months of personal finance blogging at Elementum Money, one of the best things to have happened is that friends and family have started coming up to me voluntarily either for money conversations, recommendations or even post suggestions. Some post suggestion I have been able to implement while some are still a work in progress.
Some days back, a close friend sent a link with the message, “You should write about the importance of financial planning using this as a theme. I’m sure you can write a good one.”
Like a lot of suggestions that I have received so far, it made sense to me. However, unlike other suggestions, since it meant talking about financial new year resolutions, procrastination was really not an option for me!
As pointed out earlier, only 8% of the people who kept new year resolutions ended up keeping through with it till the end of the year. The article shared by my friend gave me 3 important well-researched guidelines that could also help you with setting relevant goals to keep the focus through the year:
- Choose goals which are of deep interest to you. Unless you feel strongly about achieving those goals, and not at the behest of some one else, you are setting yourself up to potentially fail in keeping up with the resolution. My parents often told me how I need to get to better fitness. The only time I really started working towards it was when I started feeling the lethargy and wanted to do something about it.
- The goal needs to be high on affect. Affect relates to your emotional interest in the goal. How does it make you feel? Do you get a warm fuzzy feeling while in pursuit? As an example, last year successfully completing the CFP program was a goal for me. Initially, it came with its share of challenges in managing the time to study along with a hectic day job. However, gradually I really enjoyed getting to understand real-life relatable finance and the fact that I got it. Of course, whenever I passed an exam, the feeling just got better
- The goal should be high on value. What does the goal mean to you? How does it help with your identity? Maybe you no longer want your family to think of you as the baby and intend to show responsibility. Your new year resolution might be on your agenda to help you with “adulting”. Zero in on a goal that helps you with an aspect of your identity that you want to change. In 2012, my resolution was to move out of my cramped Paying Guest accommodation to living on my own just to tell myself that I can live alone and enjoy my own company.
Keeping these 3 pointers in mind, I propose that we all focus on keeping the following 5 financial new year resolutions. These simple resolutions are drawn with an attempt to make you feel responsible, relaxed, conscious and aware about your money. I have steered clear of the money basics that I believe everyone knows about like save at least 10% of your income, pay down your debt aggressively and do not be afraid of investing in markets.
The statements below are more reflective and meant as a guiding path to whatever you do with your money. You could even think of them as text-based GPS aimed at guiding your money to where you want to see it.
I will spend only on needs and not wants
Granted it is increasingly difficult to differentiate between our needs and our wants in today’s consumerist society. One thing you can do is ask yourself – Do I really need this new dress? Whom am I buying it for, myself or to impress the folks in my next party? If the purchase still ranks high in your core values or your identity, by all means make it. Just avoid spending money in a blur.
I will claim my rightfully earned money
To me this is a big one. One area is making investment declarations to the maximum and on time to have the least tax deducted. What about all the reimbursements your company offers? Mobile phone reimbursements? Travel reimbursements? Personally, the paper work involved has often led me to be lazy and skimp on it but I am improving on this front. Some months back I finally moved my home loan to a staff loan with a much lower interest rate and also part of my salary. Let us reclaim our right fully earned money in 2018.
I will plan better to avoid paying last-minute premiums
The first thing that comes to my mind in this aspect is flight tickets. Check your office holiday calendar right now, mark out the dates, plan your holiday and put a price alert. Pledge to book any flight ticket at least 45-60 days in advance. Another whopping area where you stand to save when doing things on time, is when you pay your income tax on time. In the year of my transition from one bank to the other, I did not pay attention and ended paying a penalty cost of Rs. 5000.
I will not fall back on good financial habits
I have a confession to make. Till now I have invested in the stock market only in lumpsum amounts. 2018 will be the year when I regularize that habit by starting a SIP. I am also going to automate a fixed amount out of my salary account to go out as saving. Automation is known to make a person better at financial planning. We humans are lazy by default. When we have to make an effort to stop something, we would rather let it go on. Let us ensure we do not fall back on good financial habits like paying our bills on time, paying for life insurance premiums or automated saving and investing every month.
I will simplify my financial life
My work space has always been known to be cluttered, through multiple offices. As a trend, I let the clutter on my desk grow for days on end to finally get irritable or have a document missing and then go on a cleaning spree. Money is more important than my work desk to me and I would rather streamline data to simplify my financial life. I have already cut down the number of my savings accounts to an optimal number of two. I mostly keep my digital wallets like Paytm and Freecharge down to zero rather than block money in them. All my investments are in one demat+trading account linked to the second savings account. If your money is spread out in multiple streams, make 2018 the year to simplify it so you know exactly where and how much money you have.
These 5 statements are going to be my financial mantra for 2018 for sure. What about you? Anything which you think fits the bill and I might have missed out, let me know through your comments or email me at email@example.com