A New Year, A New Financial You - Where to Start

The pattern is unmistakable. December is a time for introspection. January is a month of resolve. The same old routines return in February.

Financial resolutions nearly always fail for the same reason: they are expressed as directions rather than destinations.

Increasing savings is not a goal. The objective is to start saving Rs 2,000 a month into a different account on January 1st.

Reducing spending is not a goal. One goal is to cook at home on weekdays in order to cut monthly food delivery expenses from Rs 4,000 to Rs 2,000.

Paying off debt is not an objective. My objective is to pay Rs 5,000 more than the minimum amount owed on my HDFC credit card each month until it is zero.

Specificity makes a difference. When one's willpower weakens, hazy goals fade away. Because they only need to be decided upon once before being carried out, specific plans with tangible actions endure.

With the aid of this guide, you may transform your financial intentions into realistic financial goals for the upcoming fiscal year.

In advance of creating any plans for this year, make sure you fully comprehend what transpired the previous year.

Calculate:

total earnings during the last 12 months. Total amount spent, including on shopping, entertainment, transportation, food, rent, and other expenses. Net change in debt: Is the total amount you owe now higher or lower than it was a year ago? Net change in savings: did savings increase, decrease, or remain unchanged

Regardless of how it felt, these four figures give you the truth about your fiscal year. Even though they believe they were being cautious, many consumers are shocked to see that their savings did not increase at all. Many find that their debt has increased without them being able to completely register it. 

Not for the entire year. For January through March of this quarter.

one monetary objective. particular. quantifiable. with a distinct monthly action.

For instance:

Save Rs 5,000 every month beginning on January 1st to accumulate an emergency fund of Rs 15,000 by March 31st.

Instead of paying the existing minimum of Rs 3,000 per month, spend Rs 8,000 per month to pay off the credit card with the smallest outstanding balance by March.

Reduce monthly food delivery orders from 15 to 6 and cancel three subscriptions to cut monthly expenses by Rs 3,000.

One objective. A quarter. Just one action. Reach it, rejoice, and schedule the next one for April or June.

This strategy is effective because it is doable rather than overwhelming and because short deadlines foster accountability that annual goals do not.

Set up the automatic transfer now, regardless of your savings goal. Not the following month. Not until the paycheck comes in. Right now.

The best financial system you can implement at the beginning of a new financial year is a standing instruction from your primary account to a different savings account that is activated on the day your salary comes.

Because it takes the decision out of the equation, this works. Before you can see it and spend it, the money moves. You survive on what's left. You make adjustments. The savings accumulate.

There is hardly ever anything left if you wait until the end of the month to salvage what's left.

The majority of people bring debt from the previous year into the new year with only a hazy plan to pay it off. Then February comes. March comes next. Additionally, the debt remains, albeit somewhat increased as a result of interest.

This month, decide on a specific course of action for each outstanding debt:

Can I use an aggressive payment plan to pay this off in six months? If so, make the plan and automate it.

Is it necessary to combine several loans into a single, lower EMI in order to make repayment feasible? If so, speak with FREED.

Has this debt grown to the point that I truly can't pay it back in full? If so, FREED can assist you in negotiating a settlement, which is a valid choice.

It's not necessary to make the choice by yourself. In just one call, FREED's free consultation explains the practical solutions for your particular situation.

At the beginning of a new financial year, there is a temptation to make all the changes at once. Begin meal planning, budgeting, saving, investing, and keeping track of your spending on January 1st.

This hardly ever works. When you attempt to develop five new habits at once, none of them endure.

For this quarter, pick one new financial habit:

For ninety days, keep track of every expense in a notepad or an app. Cook at home every day of the week, Monday through Thursday. Every Sunday nite, check your bank statement. Set up auto-debit now and pay all credit card bills in full before the due date.

Just one habit. 90 days. Add the following one once it starts to happen automatically.

One well-established new habit is worth more than five that are started at the same time and abandoned in a matter of weeks, according to research on habit formation. This is the true basis for making a new fiscal year truly different from the previous one.