11 Ways to Start Fresh Financially in 2022

The New Year is almost here, it’s time to review your budget, debt, and investments and importantly check them against your financial goals. The new year comes with new opportunities to set new goals for the year ahead. If you’re considering setting new goals for health, career; consider adding financial resolutions as well. You should be more disciplined to achieve financial freedom early in life and for that you should embrace good financial habits.

Here are 11 ways to kick off the year with a fresh perspective to help meet your financial goals,

1.Review Your Household Expenses

Start the year by reviewing your expenses. Write your average monthly income (salary, business, etc.), as well as your fixed and variable expenses. This is important to determine your financial priorities for 2022. For example, maybe you’re thinking of taking a trip to some exotic place in the summer, maybe you’re planning to save even more for retirement & other financial goals, or increase SIP amount in Mutual Funds. Understanding your top priorities can help you develop the ideal budget for you. 

2.Reduce your expenses

After assessing your monthly budget you must be knowing about streams of high expenses. Try to go out less for dinner. Eat home cook food & expenses on ordered food. Assess your online shopping expenses, which was important and which was done just because there was an offer.

Reduce your expenses on Fuel. Try walking wherever possible. Don't use a vehicle for a small distance. 

3.Take a look at your Emergency Fund

Pandemic already has taught a lesson, how the emergency fund is important. If you haven’t made a provision already, now’s a good time to that you should have sufficient savings kept aside for emergencies. An emergency fund also can help you to avoid having to liquidate portfolio assets at low prices during volatile markets. Having an emergency fund of five to six months of living expenses is known to be safe and that also in a safe liquid asset or kept in a savings bank account. 

4.Assess Your Debt

Check your different debts. Credit card bills, home loan, personal loans, etc. It is good if you are already managing your debt smartly, consider taking steps to reduce it further. Target high-interest rate debt first. Reducing the number of loans you carry can help you simplify your financial life. It will also ease your stress. You may want to ask your Financial Advisor about possible strategies. Our credit score plays a critical role in determining how easy you will get financing and other financial services in the future. Pay your credit card bills on time.

Try not to buy anything with a Credit card. Prioritize your shopping needs.

5.Check your insurance cover

Check if you have adequate insurance cover. Purchase an insurance policy to protect your assets in an unanticipated event or death. Types of insurance coverage include mainly life & health cover. Buy a pure Term insurance plan with adequate cover.  Buy this as early as possible to have a low premium amount. If you already have health insurance from your employee then assess if it is sufficient or needs a top-up.

6.Prioritize Your Health & mental wellness

Today everyone is living this fast & monotonous life facing lots of pressure on all fronts. Take a break from this routine often. Go Travel, walk, do cycling, go on a forest trail, read a book, follow your hobbies. Spend more time with your family. 

Spare some time daily for exercise. Walk or Run daily. Install Health & exercise apps that will help you motivate and track your progress. 

7.Review your Financial Goals & their progress

Check whether you are on track for your financial goals. Check your monthly average expenses and your previously calculated Retirement corpus is still valid or there is a drastic change in it. If there is a difference & you are off track, have a talk with your Financial Advisor to figure out how you can get back on track. If you are on track with your financial goals, talk with your Financial Advisor about how can you increase your investment for previously missed financial goals. 

8.Reduce your bank accounts

Having multiple bank accounts generally causes trouble maintaining. Multiple debit cards, multiple accounts. Keep track of the minimum balance for each Bank. Struggle to keep track of all transactions and get statements while filing the income tax return. Keep one private and one Government bank saving account. Keep the bank account that requires the lowest minimum quarterly balance. Try to keep maximum 2-3 bank accounts.

9.Automate your investments & invest more

Keeping track of all savings and investments being a salaried or business person is difficult. One of the smart ways to save and invest is to automate your investment amounts. Use the benefit of Systematic investment plans (SIP) and National Automated Clearing House (NACH) e-mandates for your automated investment needs.

Only saving will not help you beat inflation, You need to invest and diversify your portfolio. Direct equity or Mutual funds have the potential to give you higher returns. Every year increase your investment amount by a minimum 10%.

10.Work on your will

If you have a will already, update it if necessary. If you are yet to make one, schedule an appointment with a lawyer to write one. Do remember, proper distribution of your wealth after you is one important thing. 

Pandemic has already taught a lesson. Times like these teach us to consider what can be done to protect our loved ones.

11.Check nominee details

Check your bank accounts, investments (Demat account, Mutual Funds, etc.) have correct nominee details. There is a significant unclaimed amount with AMCs because investors have not mentioned or have incorrect details of their nominees. Adding a beneficiary or nominee to your investments is critical to ensure your assets go to the person you want to have them.