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Money resolutions to carry forward to 2020

Resolutions are a way to reflect and repair what’s not working. Every individual’s money life must include these three resolutions to kick start 2020 with.

The start of a new calendar year is always a good time to reflect how the previous year went by. When you are reflecting on what changed in 2019, do remember to include your financial life too. You may or may not be an earning member of a family, but you will have a relevant financial life be it spending, investing, lending ,or saving. 

Resolutions are a way to reflect and repair what’s not working. Every individual’s money life must include these three resolutions to kick start 2020 with.

1. Spend only what you have

As the credit culture moves forward and takes even the young earners in its fold, savings for Indian households is steadily declining. If you too, are funding your spends with that easily available loan, you may rejoice at first, but when the money runs out, you will repent. 

Spending money beyond your earning capacity has an effect of instant gratification but will leave you burdened with repayment. It could be small amounts starting with credit cards, or moving into personal loans or even EMI on that car you really can’t afford. As the various debts pile up, you may find that all your energy and earnings go in repaying the loans rather than building a secure financial future. 

In 2020, resolve to avoid debt and live within your means.

When salary increases, it's more tempting to spend rather than bump up investments. As a routine however, with every increase in earning, increase your investment proportionately. What you have saved or put aside as an emergency fund needs to be enhanced every year only in proportion to your income growth.

2. Step up your investment 

At the end of every year, try to calculate how much you have saved. Big picture calculation. Estimate the total earnings, see what your incremental investment has been and add to that what’s left in your bank. Often income escalation happens annually but savings and investments remain at the same level. This is because both aspects are controlled by different sources. 

When salary increases, it's more tempting to spend rather than bump up investments. As a routine however, with every increase in earning, increase your investment proportionately. What you have saved or put aside as an emergency fund needs to be enhanced every year only in proportion to your income growth.

In 2020, resolve to enhance your contribution to long term investments every year.

3. Be risk aware 

Don’t blindly follow investment advice in 2020. There are too many instances of frauds or individuals lured by promise of high return, only to realise later that either it was a scam or money is locked in or tax and fees eat into most of those high returns. It’s not just investment risk or market risk but also the risk of being duped. Make sure you ask the right questions and fill in the accurate goals before you pick an investment. 

This way you will ensure that there is higher probability of matching your investment return expectation with the goal. For starters don’t stray away from regulated financial and physical investments. Risks are also present in spending, such as falling for fake schemes offering luxury cars as lucky draws or discounts that make you spend on needless things.

In 2020, resolve to understand the risks involved in your money transactions. 

The three resolutions highlighted above are really about applying good common sense while making money decisions. Sometimes, in the rush of things we forget, but every family must safeguard against some common money mistakes. Hence, use the turn of the calendar to renew and refresh your money life and your investments.

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