New Year comes with the New Year resolutions. With the onset of 2019, we will talk about the Top 10 Financial Resolutions that one must-have. How much do you score in this? Have you covered all 10, or there is still some of the Financial Resolutions that you must list in your to-do list for 2019?
Whatever plans you might have made for this year, ensure that you tick off these 10 financial resolutions as well.
Give yourself a score of 1 for each resolution and then check your score for the same.
Give yourself a score of 1 for each resolution and then check your score for the same.
1. Protect your family: Opt for a Term Plan
The first step in securing your family should be investing in a good term insurance plan. Term plans allow you to avail high coverage levels at the lowest premiums ensuring that you can create a substantial corpus for your family in case of your premature death. Nothing can be better than knowing that even if you are not around your family would be taken care of financially. So, invest in a term plan which has long coverage tenure and a high sum assured.
Tip: Ideal Term Insurance coverage: Minimum of 20 times your Annual Income
Read more about Term insurance are evolving here’s what you need to know
2. Secure their health issues with a health insurance plan
After you have secured your life with a term plan, it’s time to add another layer of security through a health insurance plan. Health plans provide financial security to you ensuring that the staggering medical expenses faced in a contingency would be taken care of.
Tip: Buy a family floater health plan covering all your family members and have a coverage level sufficient enough to pay for medical contingencies.
3. Create an emergency fund
Premature death and illness are not the only two contingencies which you might face in your life. There are other contingencies too which require financial assistance. For instance, in case of loss of your job where would you get the funds to take care of your family’s expenses till another job comes along? For this and any other contingency, you should create an emergency fund.
Tip: At least six months’ worth of your income in the fund to help you sail through difficult financial times.
4. Invest and create a financial portfolio
After the first three steps are taken care of, you should invest your savings into different avenues. You should create a financial plan which would highlight your goals and their time horizon. Then you should choose the investment avenues which would meet your goals. The avenues should fit your risk appetite, give the maximum possible returns and also should be tax efficient.
Tip: Create different buckets for different investment goals. That would make your accounting easy as well.
5. Make a Will
A Will is a legal document which states your wishes on the division of your property after your death. To avoid unnecessary hassles between your family members and a possible cause of family feud, you should make a Will designating the distribution of your property after your demise. The document should contain clear instructions so that there would be no misunderstandings between your family members.
Tip: Remember to get probate of the will as well, for the same to be valid in the court of law.
6. Educate your family about your financial holdings
Most often than not, even when you have invested in insurance products, your family fails to get the benefits. The reason is ignorance on their part. While you create a financial portfolio and buy insurance products, you don’t inform your family about them. As a result, when you are not around or are otherwise indisposed, your family members don’t know how to utilize your investments.
Tip: Inform your family members of the insurance policies you own and their claim process. Also, let them know about your investments so that they can use them when you can’t. Do not forget to add nominee details as well.
7. Invest in a house
Nothing gives your family security than having a house which they can call their own. After taking care of your short-term financial goals, invest towards a house. Your house would prove to be an asset not only for you but for your family as well.
Remember that home loans give you an additional tax benefit as well!
Tip: Remember to protect your home loan, in case you opt for one, with a Loan Protect Plan as well.
8. Plan for your child’s future
While you dream of providing your child with the best education, your dream can turn into reality only if you have sufficient funds at your disposal. Education has become very expensive and if you want the best, the costs multiply. That is why you should start planning for your child’s future from an early age.
Tip: Invest small amounts regularly to accumulate a substantial corpus which would provide for your child’s future and make it secure. The keyword here is PLANNING.
Find out how to plan your child’s future.
9. Try paying off your debts
Your debts can prove to be a burden for your family if they have to pay it off in case of your sudden demise. All the financial security which you would have created for your family would be eaten away by your debt repayments leaving your family with nothing. So, try clearing off your debts as soon as possible. Debts are liabilities and the lower debts you have the better secured your family would be.
Tip: Clear off your bad loans before the good ones, i.e. the loans where there is no additional tax benefit and is compounding in nature to give a very high rate of interest, like personal loans and credit card loans before the good loans like home loans and education loans.
10. Plan for retirement
Do you know that after retirement you need a sizeable corpus to take care of your lifestyle expenses? Given the rate of inflation decreases the value of money over time, lifestyle expenses would be double or more than they are today. So, you need a sufficient amount after retirement to take care of your expenses.
Tip: To build the retirement corpus you need to start saving early. When you start early you can save a considerable amount. Moreover, if you have a retirement fund, your spouse would be taken care of if you predecease them.
Read more about investing for requirement
So, now that you know the Top 10 Financial Resolutions that you must-have, what is your score? Are far are you from your score of Perfect 10? This new year, do something completely different and ensure your loved ones feel safe and financially secure.
