December 3, 2018
Many of us wish to begin 2019 with positivity, renewed energy, and carry out certain changes in our life hoping for the better.
During this time of the year, you may be introspecting on various facets –––the purchases you made, the lifestyle you lead, the time you give to family, health, and so on.
But along with these, paying attention to your personal finances to lead a healthy financial life is also very important. So, here are 5 financial resolutions to keep:
- Resolution #1: I will focus on saving more
- The essence of this lies in the old adage: Money saved is money earned.
- Saving hard-earned money can enable you to lead a healthy financial life. Therefore, focus on saving money by conducting a prudent budgeting exercise. Ideally, as Warren Buffett says, “Don’t save what is left after spending, but spend what is left after savings”.
- Money saved diligently should be parked in a savings account. Thereafter, invest it wisely, to generate wealth for you and accomplish your financial goals.
- If you are looking at astutely managing your liquidity needs and earning a high rate of interest, consider making fixed deposits across tenures maturing in a short span of time (a few weeks or months) to the longer ones (over a year).
- Resolution #2: I will set SMART financial goals
- All of us have certain financial goals, viz. buying a new home, a new car, providing the best education to children, getting them married in style, going abroad on a leisure trip, and live the golden years of life in bliss.
- But this year, make sure you are setting SMART goals. Meaning, they need to Specific,Measurable,Adjustable,Realistic, and Time-bound. And once you do that, engage in financial planning and start investing in fixed deposits besides other investment avenues.
- Resolution #3: I will start investing regularly, systematically and follow the discipline
- You may have heard, the long-standing proverb: Rome wasn’t built in a day.
- Likewise, wealth creation is a journey. Money saved needs to be invested regularly and systematically.
- To build wealth through systematic deposits every month, consider Axis Bank recurring deposits (RD). The deposits can earn you a higher interest rate depending on the amount of instalment and the deposit period.
- The RD can be opened online with a monthly instalment of as little as Rs 500 with no maximum limit. Similarly, if you are a risk-averse individual, who wishes to generate wealth securely and steadily, investing in RD can help you plan for short-term as well as long-term financial goals.
- Remember, just like you need to be disciplined to lead a healthy lifestyle, even your investment activity require discipline. So, as far as possible, do not skip an instalment and/or prematurely encash your investments.
- Resolution #4: I will ensure financial security and wellbeing of my family
- Along with life insurance for the financial security and well-being of your family, doing sure shot or safe investments is essential. Even in the world of financial engineering and exotic investment products, bank FDs should occupy an important place in your portfolio. This is because:
- A bank fixed deposit offers a fixed and secured return, unlike market-linked instruments;
- Can address your liquidity needs (if the plan and tenure is thoughtfully selected)
- Can address your contingency needs
- Can come to your recourse when you’re in dire need of money vide a loan against FD
- Plus, from an asset allocation and diversification standpoint, it is sensible to hold some money in fixed deposits.
- Resolution #5: I will attempt to maximize tax saving
- Tax planning, as you know, is a holistic exercise, whereby you can avail of the permissible exemptions, deductions, and reliefs available under the provisions of the Income-Tax Act.
- Always make it a point to engage in your tax planning exercise right since the beginning of the financial year; avoid keep it for the eleventh hour. This will help you plan better and steer clear of sub-optimal utilisation of tax saving options.
- A 5-year tax-saver bank fixed deposit can help you reduce your tax outgo. Investment in a 5-year tax saver FD is eligible for a deduction under Section 80C. You can invest as little as Rs 100 in a tax-saver FD, while the upper limit is Rs 1.50 lakh in a financial year. You can choose between reinvestment of interest; and quarterly/monthly pay-out of interest.
Note that a Tax Saver Bank FD comes with a lock-in period of 5 years, which in fact is good to compound wealth. To invest in ‘Tax Saver Fixed Deposit’ and know more, click here.
Finally, don’t just keep these financial resolutions; follow them conscientiously in the interest of your financial wellbeing.
“No one's ever achieved financial fitness with a January resolution that's abandoned by February”
– Suze Orman.
Disclaimer: This article has been authored by PersonalFN, a Mumbai based Financial Planning and Mutual Fund research firm known for offering unbiased and honest opinion on investing. Axis bank doesn't influence any views of the author in any way. Axis Bank & PersonalFN 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. Please consult your financial advisor before making any financial decision.