The financial resolutions you make during a new year are crucial. They might become your future money habits. In 2018, 74% of survey respondents were able to stick with their financial resolutions throughout the year. About half of this 74% admitted that following the resolutions may have contributed to improving their financial situation compared to the previous year. The research suggests that keeping monetary resolutions promotes good money habits, and prevents acting on bad ones. Here are 8 New Year resolutions for a wealthier 2020:
1. Only Buy Things You Need
Offers to buy expensive things, yet unnecessary items are everywhere. Open Amazon, and you’ll find at least one major sale going on. It is tempting to purchase things you don’t need if huge discounts are constantly advertised. The money habit of buying things out of ‘want,’ not ‘need,’ is a major drain on your wallet. For your New Year resolution this year, only buy things you need.
2. Save 10% of Your Monthly Income
Most people blow off their year-end bonus on a new phone, car, or other such luxuries. The fact, however, is that even millionaires save. In fact, they save a lot: about 64% of their income. This number is not inclusive of tax. If it were, the portion saved would still be significant. One of the healthiest money habits you could adopt in 2020 is saving just 10% of your income.
3. Invest What You Save
If you invested Rs. 30 daily with a rate of return of 10%, you would have Rs. 1,184,590 after 25 years. If the rate of return were higher, say 15%, then you would build a corpus worth Rs. 2,679,596. Investing is one of the best things you can do to increase the value of the money you have in your savings account. As a financial resolution for 2020, invest whatever you save in a month.
4. Start Your Retirement Fund
It’s never too early to start retirement planning. One essential New Year resolution to adopt is to start a pension plan of your own and invest in it monthly. Pension schemes come in a variety of options. Traditional plans are purely savings-oriented. Your premiums are invested in a pension plan at a reduced tax rate and eventually accumulate as a corpus.
Additionally, there are unit-linked insurance programs -ULIPs- that invest part of the monthly premiums in assets of your choice and save the rest as a retirement fund. ULIPs might yield more profitable returns than traditional plans and make an excellent option for investors also looking to save. Bajaj Allianz ULIPs on Finserv MARKETS offer these benefits in addition to affordable premiums, flexibility, and tax benefits.
5. Pay Off Debt
Any loan becomes a financial burden. The quicker you deal with debt, the more you save. Aiming to pay off your debt, mortgage, or loans by the end of the year is a valuable financial resolution. It helps you get rid of bothersome monthly payments. Instead, to fast-track paying off debt, one can opt for bi-weekly payments or one extra monthly payment to your lender.
6. Commit to Cooking
In 2013, Indians spent 40% (the majority) of their monthly income solely on food. Less than half that amount was spent on their rent, electricity, and groceries.
Source: UK India Business Council
How much can you save with this financial resolution? Assume lunch from your office canteen costs Rs. 70. An additional Rs 20, spent on tea or snacks. Finally, Rs. 50 a day, spent on cigarettes. With 20 workdays in a month, this cost adds up to Rs. 2800 spent on food in a month. In one year, this is Rs. 33,600. This amount is not inclusive of the money spent on outings or drinks. Cooking for yourself can save you approximately Rs. 40,000 a year.
7. Allocate a Budget To Curb Spending
Add budgeting to the list of 2020 New Year Resolutions. Budgets increase financial awareness. Budgeting realistically shows you how much you spend on food, transportation, house-maintenance, and miscellaneous things like luxuries. Those who budget save more since they have placed a limit on how much they can spend.
8. Reduce Tax
Most resolve to reduce how much tax they pay at the end of the fiscal year, as it can be a financial strain. One surefire way to reduce income tax to invest part of your savings in ULIPs or Pension plans. Pension premiums under Rs 1.5 lakhs are exempt from being taxed by law. Hence, as long as the premiums do not exceed Rs. 1.5 lakh, you save paying tax on the money you invest in ULIPs or other pension schemes.
In conclusion, 2019 is coming to an end and it’s time to change your money habits by making meaningful resolutions. ULIP plans, available on Finserv MARKETS, understand that different people might have different needs. Hence, they offer a variety of options such as retirement plans, and child plans with investment options. Get the triple-benefit of your retirement fund, the opportunity to invest, and the choice to save for your children’s future by choosing Bajaj Allianz ULIPs on Finserv MARKETS.
Also read in detail about the ULIP tax benefits you can avail with a Bajaj Allianz ULIP plan available on Finserv Markets.
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