2017 has finally arrived and most of us are still busy making grand plans for the New Year. Amidst our various plans, one thing will gnaw on our conscience: our New Year resolutions. What can we do to be better than our former selves in 2017?
So have you made your resolutions yet? Are you planning to? Would your resolve to lose weight or be fitter? Would you resolve to pick up a new skill, like learning to paint or to play a guitar? What about some resolutions with respect to your money management skills? They would be good for you, too.
Here are five fresh ideas for you to consider in 2017.
Idea # 1 – Go Digital
If there’s anything demonetisation has achieved, for better or worse, it has taught people the need to go digital. E-wallets, debit cards, credit cards, net banking, and UPI have become popular like never before. They have reduced the need for hard cash, which in any case, is in scarce supply. The common man, businesses, service providers and the state have all looked towards digital payment options. There are plenty of incentives for going digital, too. For instance, e-wallets promise attractive cashbacks and discounts on various transactions while credit card transactions allow cardholders to earn reward points and discounts at merchant outlets. In the New Year, let’s see you make the attempt to digitize your finance and reduce your use of hard cash.
Idea # 2 – Don’t Just Insure; Invest
For years, we have equated insurance with investment. While investing through insurance has its pros and cons, we think it would be wise to separate the two. This would allow you to get greater benefits out of both. When you buy an endowment life insurance plan, you’re signing up for low returns over a very long period, which is detrimental to long-term wealth building. You would be better off opting for a term insurance plan, which is cheaper and provides a much bigger coverage. A 30-year-old salaried male can get a cover for Rs. 50 lakh for an annual premium of Rs. 5000. He can use his savings from choosing a term plan over an endowment plan, and invest them in several more attractive options such as PPF, mutual funds, equity, etc. So don’t expect your insurance plan to provide you good returns. They are for contingencies, not for increasing your net worth.
Idea # 3 – Go Online For Better Deals
Just as I urged you to go digital for your daily or monthly transactions, you should consider buying your personal finance products online as well. Going online allows you to control the levers of your product search. You completely control what you are looking for and what you will buy. You can specify your requirements and find out which service providers can cater to those requirements. Then, you can compare options from different providers on parameters such as price and features. This allows you to make an informed purchase and reduces mis-selling. You can now also complete a large part of your paperwork online and also avoid being pestered by sales agents. So say goodbye to walking into the nearest branch. Just sit back and buy what you need from your phone or laptop.
Idea # 4 – Insure Yourself
Insurance is an extremely important part of your financial decisions which should not be ignored. While a term insurance plan is necessary in case of pre-mature death, a health insurance plan is also necessary in the face of rising medical expenses. Who could bear the financial implication of pre-mature death or disease? Life and health insurance policies should feature prominently in your financial portfolio. A word of advice, though: ensure an optimal coverage in both term and health insurance plans for a complete and optimal level of protection against financial uncertainties. Also think about buying critical illness covers that would financially help your family in case you are diagnosed with a serious disease.
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Idea # 5 – Buy Mutual Funds
The last idea, but certainly not the least is taking care of your investment portfolio. When investment is on your mind, go for mutual funds. They give you attractive returns while at the same time diversifying your risks. Even when investing in mutual funds, go for variety. There’s a fund for every need – be it the need to park your money for a week, or building long term wealth. Invest in a mix of funds to have a diversified and balanced portfolio. Pick equity funds, debt funds, balanced funds, tax-saving funds, etc. and make your investment portfolio varied and not lopsided.
What do you think of these ideas? Don’t they relate to your personal finance? While you are making other beginnings in the coming year, do spare a thought for new beginnings in your financial life, too. Take lessons from 2016 and incorporate the same in your financial plan for 2017. Whether it is going cashless and making our country digital or handling your insurance and investment portfolio, these ideas are sure to change your financial outlook. And yes, one more thing – look at these ideas more as must-dos for the year rather than resolutions, since resolutions are very easy to break.
(The writer is CEO, www.bankbazaar.com)