Five Financial Decision you should take in 2020 for better money management
Year 2019 has gone and here we are in the new decade. We all must have achieved many things in the past year and might be able to make this past year a great one. Also many of you have thought of something on 1st day 2019 and still was not able to make it. Don’t Worry!!!
You have time now. This is new year, new starting and new opportunity as well. Its never too late when you really want to do something. Many of you already have taken the new year resolution and started executing. Aren’t you? If you are not, think of something right now and make a note of it. Declare a date and start working. Believe me, if you will write it and declare a date you will have a clear idea by what time you want to achieve that goal.
Well this blog post is specifically about making resolution/decisions related to personal finance for better money management. If you take that decision in the first month of this new year you will be able to achieve that goal. The early you start the better you will get. I am going to share what decisions you can take so that you will be easily able to manage your personal finance. You are CEO of your life and you have to take decisions for yourself so that you can raise money for your expenses/luxuries.
Without taking much time lets look at all the financial decisions which you should take in this year 2020. Top five financial priorities which must be there on your cards for the year 2020. Make a promise to yourself that you will follow it by heart and make yourself a successful and disciplined financial investor.
- Follow 50/30/20 Rule: If you know a little bit about finance or if you already read about investing you must have read about it. According to this rule 50% of you total income should be for your normal spending (like rent, clearing debt, education and other liabilities). 30% of the rest should be spent on your luxuries (like purchase something what you want, plan vacation, weekend parties etc) And the 20% of the remaining should be SAVED. Hope you know why it is bold. Obvious reason is so that you understand that saving is really important for your financial planning. If you want to be a good disciplined financial person first you should invest the 20% savings and then rest use for your expenses.
- Have SMART goals: This is very important financial decision you have to make. First you make SMART goals and then according to the goals you need to make investment. There are some people who invest first and then decide a goal. How one can sit in a bus without knowing where to go. First decide your destination and then start the journey towards to it. Declare how much money you need by the end of the year or think of a targeted amount you want to have for a specific need. It can be a travel plan or education fund for you or your family member. Having SMART (Specific, Measurable, Achievable, Realistic, Time Bound) goal allow you to work towards it.
- Retirement Planning: Earlier you start better it is. If you have never thought of it then give a thought and start planning it. See retirement planning should start soon as you start earning because everyone want to retire early. Many people I know who think of a road trip like “Zindgi Milegi Na Dobara” (an famous Indian movie) but they don’t know how will they get that much of money. If you start early retirement planning then definitely you will have clear idea how much to save. Remember, inflation is the biggest enemy here. 50 years back a rupee costs too much but today even 100 rupees make no sense for us. Now consider you after 50 years from now what will happen. Start thinking about your retirement now. PF and NPS is the best investment vehicle to build your wealth till your retirement. Biggest advantage is that they are tax free.
- Clearing The Debt: Many people I have seen who earn a good amount of money but still they fail when it comes the savings for future. The biggest reason for that is Debt what they are creating. Credits card bills, car/bike/home loan EMIs, education loans etc are eating their most of money due to which one can’t manage their personal finance. The wisest idea is to not have any debt and if you have one clear it this year as early as possible. Have auto debit facility for your credit card so that you don’t need to pay any fine. If possible don’t take a credit card. Remember your CIBIL score is also on risk if you delay the credit card bill payments.
- Insurance: Life is very uncertain and we don’t know what will happen next. We don’t have ANY control over it. Everything will go in vein if we don’t have an insurance to safeguard us and our family. Having an insurance will ensure that your family will get good amount of money even after you. Though I pray for everyone that nothing will happen to anyone but this is what life is. Better to have a safeguard for us and our family to fight uncertain incidents happen in our life. Don’t think Insurance as a Investment option but look at it as a backup after you for your family.
That’s all what I can share with you for the wise investment resolutions to make in the very start of year 2020. See this year will also pass like last year so challenge yourself and promise that you will not be the same person like last year. You will do something this year will proper planning and execution. All the best for all of you. Make this year a great year.
Note: If you have any questions related to investment or have any comments don’t forget to post below.