The new year brings an opportunity to reflect on the past year and to set new goals for years to come. If you’re considering setting physical and mental fitness resolutions, add financial wellness resolutions as well. Here are seven ways to kick off the year with a fresh perspective to help meet your financial goals:
1. Revisit your household budget: Start the year by revisiting your budget. Assess your average monthly income, as well as your fixed and variable expenses, and determine your financial priorities for 2022. For example, maybe you’re looking forward to putting extra income toward a bucket-list of retirement corpus or perhaps to buy a new car. Understanding your top priorities can help you develop the ideal budget for you.
2. Check your emergency fund: If you haven’t done so already, now’s a good time to double-check that you have sufficient savings for a rainy day. Not only can an emergency fund help you to avoid having to liquidate portfolio assets at depressed prices during volatile markets, but it can also help keep you afloat if your employment situation changes. Ideally, 3-6 months of living expenses may provide you with a comfortable cushion and greater focus you need to pursue new opportunities.
3. Tackle your debt: Even if you’re already good about managing debt, consider taking steps to help reduce and consolidate it further. For example, if you’ve got a raise or have been able to save extra, consider applying the extra income to any balances with high interest rates. Then, think about consolidating any remaining debt, which can let you swap the varying interest rates on multiple loans, cards for a potentially lower rate on a single loan. Reducing the number of loans you carry can greatly help to simplify your financial life and ease money stress.
4. Prioritise your financial wellness: Use the new year as an opportunity to feel more in control of yourself, mentally and financially. Formulate a financial and retirement plan for yourself and your family; invest as per your identified goals, time horizon and risk appetite. This shall also help you better your interactions with advisors, and invest & monitor in an objective and optimised way. You are most welcome to fetch our help and expertise, if need be.
5. Make sure you are on track with your goals: As you begin a new year, be sure to check whether you’re tracking towards your goal, such as saving and investing for a comfortable retirement, child’s wedding, education abroad, and so on. If you are off track, work with your financial advisor to figure out why and how you can get back on the right path. If you’re on track with your goals, talk about new goals you want to work toward. For example, if you had temporarily reduced your retirement contributions to free up income to cover emergencies during Covid. Get your retirement account back to their previous levels and your advisor can help you look holistically at the year ahead and assess your progress towards your goals.
6. Rebalance your investment portfolios: The last 20 months’ bull run in the market would have increased the value of equities in your portfolios. Take steps to harvest the long term tax in equities and get your assets aligned to the originally decided asset allocation as per your risk appetite and investment horizon. This should be done even for sectors and segments within equities i.e. like booking profits in small caps and moving to quality large and mid caps.
7. Consider investing in ways that matter to you: Whatever may be your risk appetite, financial goals and investment horizon. At Finvision, we can help you find opportunities to align your investments with your values. Therefore, consider adding more impact to your investments while potentially generating positive financial returns to achieve your lifestyle goals in style. We will help you achieve them with our bespoke instruments and enthusiasm.
