Best Financial Resolution and Planning in the Eve of New Year and Steps to Achieve the Financial Freedom..

We human race learn art of living from society and experience. Few of us follows the learning in real life but many of us just ignore the advice of experts. But this pandemic year indicated us how much our personal and financial life can be affected with a little imbalance  in the society and ecosystem. Pandemic, adversity and emergency words  are very well explained by time. 

New Year Resolution for Financial Freedom 

We must have understood the importance of financial planning in our life. How big your business empire, how high paying job you have ,what is your status , everything turns worthless and we just struggled for life and food. 

So a proper financial and lifestyle planing is required for our life. The beginning of this year is prime time for your financial resolution. With a better plan and more knowledge you have to move ahead towards financial freedom. 

We are here to share some basis for your financial resolution which can be customised with help of professional adviser, with proper knowledge and expertise. Always remember two Golden Rule of selecting financial adviser 

(1) Never take advice from sales man, because they will have vested interest in that advice 

(2) Always take second opinion before final decision. 

Always prevention is better than cure. 

Let's move to our main topic, financial planning and resolution for New Year. Best financial resolution in eve of New Year and best financial planning for financial freedom. 

(1) Create a Budget.

Budget, means your advance planning on income and expenses for future life. Budgeting is a art, but economist may say it's a game of statistics and calculation. But actually a good budget preparing required a tons of creative thinking and it's discipline. A budget will decide your expenditure, saving and your cash flow. If your salary is fixed, you may have to go for loan, selling of investment, creating alternate income etc to finance your extra expenses. If their is some sudden emergency you may use your emergency fund. We will discuss all about budget in a separate article. 

Your best financial planning for financial freedom is your budget both short and long term. 

(2) First Saving next Expenses. 

It's normal tendency, we save the residual money which is not intentional but automated. I have meet many people whose expenses are before earnings. They are credit card user and EMI expert. Clearly I am not against Credit Card or EMI but the way many of us use those options are really painful. Proper use of Credit Cards can increase your earning and get discount in your purchases. You can earn some interest from the money you saved in your savings bank account, this will add to your earning. 

So Your New Year resolution is " Spend what is left after saving " Remember cash is king. More saving more happiness. 

(3) Healthcare &Health Insurance:

Health is wealth. The Physical fitness and correct  mental framework can help you going in long run. 

Exercise, Good Diets, Yoga should a compulsory part of your daily life. Exercise may simple as walking may hard like weight lifting.  By this we can prevent expenses on healthcare but sometimes inspite of care and prevention we need health treatment at hospital. 

Heath care expensive are sky rocket in current time. One week of hospitalization is enough to eat your one year savings. So we must buy a health insurance with cashless benefit. A health insurance can prevent our  expense on treatment. 

So our New Year resolution is healthy lifestyle with health insurance for family. 

(4) Term Insurance:

Insurance is our weapon to protect financial condition of family in any uncertain happening to our life in from of death of permanent disability. Many a times we have to take very big loans to purchase house or establish business, in case of our sudden death, it's may very difficult for family to handle it. Even in some cases they have to lose the home. So insurance is the financial instruments to protect the financial condition of your family. 

Term insurance is cheapest form of insurance. Term insurance premiums are very small but death benefits are high. 

So our New Year resolution is to purchase a Term Insurance with death benefit of minimum five year earning and liabilities. 

(5) Emergency Fund:

Depending upon your income, you may plan for at last five month income as emergency fund. Emergency fund should kept in very liquid from, that means saving bank account or money market instruments which can be converted to cash in no time. We can create and maintain our emergency fund in such a way that it should accumulate, grow and liquid. 

So our fifth resolution is Emergency fund. 

(6) Debt Reduction:

Debt means some some financial arrangement in which someone borrow money with promise to return with interest. Debt is what that is owed. Normally we are supposed to pay extra amount with principal. That means negative cash flow. If we purchased one vehicle in loan we have to pay higher amount for same vehicle. You may argue that repayment time is spread over time ,but if we compare interest paid with interest we may have earned from same money it's a very long gap. Debt is always a negative. Sometimes debt may treated as good debt because of its utilization. We will discuss about Good Debt and Bad Debt in different article. 

But for this new year it should our resolution to repay something more than our usual EMI or loan repayment will given much priority. 

(7) Start Equity Investment :

The best instruments for big wealth creation in long-term is equity. With power of compounding we can expect multi fold return from equity investment. You can invest in equity share of best company directly or through mutual funds. We can start with very small amount of Rs 100. Equity investment should always be done from long term view. Systematic Investment is one of the tools to beat market volatility. 

Our New Year resolution is to take equity exposure depending upon your financial capacity and risk profile. 

(8) Create Second Income Source:

One eye is not eye. So we should think of alternate income source it may active or passive income. If you are business man you may diversify your business, like wise if salaried person you can think of passive income source. There thousands of ways to make some extra earning. 

Our new year resolution is to add new source of income to your existing one. 

(9) Retirement Planning:

Retirement is a natural and compulsory concept of financial planning. We should think and plan about the retirement life early so that it will easy create big corpus. Retirement Planing is financial strategy to create regular income flow after retirement. This planing include NPS, Insurance Plan, Mutual Fund,  Real Estate Rental Income, MIS Scheme at bank and postal department and many more. It's May small but we should start early. 

Retirement Planning is also one of our New Year Resolution. 

(10) Invest in Yourself:

The best return anything can give investment in your skill and training. In today rat race or race for survival of fittest you should continuously upgrade and learn new skill so that you demand will ever green. If you are in business you should invest on adopting new trend and technology to add value to you venture else you will lose our credibility and efficiency.

Dear readers all the above resolution are really going to make you financially sound overtime and your asset creation will speed up. 

With proper discipline you will definitely achieve your objective of financially freedom from worries. 

Never forget there grate lines of legend Bill Gates

If you are born poor it's not your mistake, but if you die poor it's your mistake. 

I hope friends this new year's will all the above resolution will bring prosperity to tour life. Wishing you success and prosperity in this new year.