On the first day of New Year, many of us promise ourselves to start new habits, new resolutions, etc. Every resolution helps us to become a better person and achieve our goals (personal, professional or financial, etc.). Usually, people go for resolutions for a new change in their life.
Check these 10 Financial Resolutions for 2020 which helps you to achieve your financial goals & financial freedom.
1. Eye on the monthly budget:
Check every month’s expenses separately to get an idea about spendings & savings. Make it a habit. List the months separately when you spend more and save more. Check what you can do to spend less. Prepare a budget to track your money, both inflow, and outflow. A budget helps you to know where your money goes, instead of wondering where it went.
2. Keep emergency funds:
Do not forget to save some Emergency Fund, it will help you to navigate during financial dilemmas such as the debilitating illness, loss of a job, or any other emergency. This emergency fund should be enough to cover at least 2-3 months worth expenses
3. Stick to the 50 – 30 – 20 rule:
According to this rule, 50% of your salary after tax should be used for necessities. 30% of the money should be spent on wants/desires or luxuries, etc. Remaining 20% should be saved for the future or invest in your financial goals. This rule helps you to make your financial journey smooth.
Allocate savings to your goals based on priority like Child Education, Health & insurance, Retirement, etc. Review your goals and find out the changes if there are any like new job, job loss, increments, retirements, etc. These changes affect your money management. The best way to save money is to analyze how much savings are needed can be done through goal-based planning.
4. No more penalties:
No more penalties from this year. It is very important to pay your bills on time like mobile bills, credit card bills, school bills, grocery bills, and electricity bills, etc. It is not only saving your money but also directly impacting your credit rating.
If you save this penalty money, it will be useful in the future. Even if it is just a small amount it becomes huge in the long run.
5. No shopping month(s):
Challenge yourself not to shop for two or three months or at least a month. Definitely, this excludes necessities such as transportation and groceries, etc. You will realize that it is easier than you think to save money and you can adopt this new-found habit year-round.
Investment is also a better way to include in your resolutions as it will help you to achieve your future long/ short-term goals.
But ensure, not to put all your eggs in one basket. Invest your money in different segments.
Short-term goals motivate you to save more and make further goals. Choose a better way to invest when you have goal-based planning & track your investments based on long term goals. Do not forget to invest in financial support after retirement. You should review the risk and return on your individual investments.
7. Focus on your physical health:
When you make small changes in your diet, an exercise in small increments, doing meditation, and practice yoga, etc helps you feel better & healthier. When you are healthy, you do not need to spend more money on your health.
8. No more excuses to spend more:
Stop giving good excuses to spend more than you planned. Cut back on unnecessary spending like eating out frequently, going for vacations more often, etc. Eating at home makes you healthy and it is less expensive.
9. Clearing loans:
We focus on clearing the small amounts first than high- interest rate loans. You can save a lot of money if you swap items and go to a bigger amount first. Segregate all your debts and calculate high-interest rate loans. Try to clear those loans, if not possible to clear full, clear partially like 30-50% of your loans at least.
Check also: Your first steps to save money
10. Collect your change:
When you take a cab, or any other transport and paying by cash, you may end with neglecting the change. For example, usually, if the bill is AED 47, we pay AED 50 in cash. Even if it is a small amount, you can save. Therefore ensure that you collect the change without hesitating.
We know, little drops make the mighty ocean. Every small change in your spending helps to save more & to reach your financial goal. When you know you have fewer loans, your expenses will be covered reduces your stress. Check these also,
- Sometimes, small investments also make a big difference in your financial status.
- Even if you like it or not, try to find the right product & invest, it will be useful to your loved ones in the future.
- Use your credit cards wisely, control your cravings for shopping.
- Donate for a cause: Even if it is a small amount, it may be used for a pet adoption center, to fund a child’s education or an NGO.
- Spend on your needs, not wants.
- Pay off your short-term loans.
- Reward yourself when you achieve your savings target.
Finally, before planning the resolutions, don’t make them if you are gonna break them. Make resolutions only that you can keep up with and follow strictly. Make them simple but efficient.