Financial Resolutions for the Financial New Year

Most of us tend to set life resolutions at the beginning of the new calendar year. Now, the new financial year is a few days away. This provides you with the perfect opportunity to set a few ground rules when it comes to your money. 

Creating financial resolutions gives you a clean slate to create a robust financial future. It also allows you to review your old habits and helps you make changes where needed. This can help in creating a secure financial future. So, where do you start? Here are a few things to start doing in the new financial year:  

• Start Budgeting: Your first resolution for the new financial year is to create a budget. Now, many people think that creating a budget is a tedious task. However, doing this exercise once a month gives you an idea about your financial standing.
  
  Budgets help you understand your income and your expenses. It gives you a chance to look at how much you spend. When you track your expenses, you get a fair idea of whether they align with your budget. This helps identify the red flags in your budget and helps cut down those expenses. You can use a budgeting app or a simple spreadsheet to simplify things.
  

• Creating an emergency fund: An emergency fund is crucial for yourself and your family, especially during uncertain times. The idea is to set aside funds that can be used to pay for expenses. Consider setting aside money for your fixed expenses that you may incur for at least 6 months to a year. Choose an investment tool to protect your principal amount and help grow your wealth. Also, keep in mind that an emergency fund does not need to cover only short-term expenses. 

• Financial stability: One of the important resolutions to follow for the new financial year is to create a path for financial stability for the future. To create financial stability, you will need to understand how you spend your money, how much you save and invest and how you can lower your taxes¹.
  
  For instance, investing in an insurance plan can help in creating a financial nest for your family’s stability. A good term plan like HDFC Life Click 2 Protect Super provides an umbrella in the form of protection with multiple benefits such as varying cover, increasing Death Benefit, Waiver of Premium, Additional Cover for Spouse, Acceleration of Death benefit, Return of Premium2 option which can be chosen as per your evolving needs. In case of an unfortunate event, the proceeds from this plan can meet any expenses your family will have. 

• Income tax planning: Income tax planning can help lower your taxable income and help in financial saving. There are multiple tax-saving instruments available in the market that can do this for you. Choose the ones that can aid in saving and in wealth creation. 

• Review investments: The purpose of investments is to grow your wealth while protecting your principal amount. However, every investment works differently. Consult with your financial planner to understand if your investments are working for you. If the return on investment is not as expected, it may be a good time to switch or change.

• Broaden new portfolio: It is wise to choose more than one type of saving or investment plan. While traditional modes of saving are often considered to be safe, they may not be able to generate higher returns and create a financial legacy for your family. A savings plan may be a good option to consider. For instance, a savings plan like HDFC Life Sanchay Plus offers a secure future for your family and shapes up a legacy for them. The plan offers life cover to protect the family's future along with benefits and options such as steady retirement income with lifelong income option, Guaranteed3 Benefit Payouts, Guaranteed3 Income for a fixed term of 10, 12, 25, 30 years or lifelong, return of total premiums paid at the end of the payout period. 

• Review your financial goals for 2024: Having a financial plan is necessary if you have time-bound goals to fulfil. Your new year resolution should also be to review your goals and see where you stand financially. If you have a goal that needs to be fulfilled by the end of the year and are short on funds, this process will help you determine how much additional funds need to be allocated or if it should be completed in the following years.

• Think of Retirement planning: One way to attain financial security during retirement is to choose an investment plan. Retirement plans help in providing financial security during your non-working years. However, choose retirement plans that can also provide additional income during those years. One such option can be HDFC Life Smart Pension Plus. This plan comes with extensive benefits that can help you live your life after retirement without any financial worries by offering Guaranteed4 Annuity Income for the whole of life; one plan that caters to both Single and Joint Life so you don't have to worry about your spouse, a wide range of Annuity options and flexible payout options to receive your Annuity amount.

• Reduce Debt: This new financial year, prioritise reducing your debt. Start with paying off high-interest debt. This can be a pending credit card bill or a personal loan. The more the interest accrues, the higher the amount of debt. This will add an additional burden on your finances and may dent your financial plan. You can negotiate with your lender to reduce the interest rates or try consolidating it.

Following financial resolutions isn't as hard as you may think. Following a disciplined approach is the key. Let 2024 be the year when you want to start your journey to attaining financial freedom.

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ARN: ED/02/24/9542