10 simple personal finance resolutions for 2023

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Every gym around my locality is offering discounts.On the annual fee, of course. It makes excellent business sense for them to cash in on the resolution mania every new year. They know too well that people won’t persist with the lofty goals they have set for themselves. Only a very small percentage of people stick to their resolutions, say researchers. Many are overconfident, shoot higher than they can reach, do not follow up and review or they set unrealistic goals. What appeals most to my mind is the idea that what we can give up is more important than what we can do and achieve.
My resolution to walk every morning dies from my inability to wake up early. I love working and reading late into the night. The undisturbed hours that can stretch as long as I wish are too precious to lose to sleep. That I cannot give up late nights is why I can’t walk early in the morning. Resolutions break from habits we cannot break to make way for new. But resolutions do not have to be big and lofty. I have often found small and simple ones do better at being sticky. I once resolved to not take a second helping of anything. That single act has made a big difference to my eating habits and sweet cravings. I digress. Let’s make a list of small and simple resolutions to make in personal finance. Things we can do without too much trouble.

First, invest all surpluses. Look at your bank account on the day prior to your salary date. Every month. Simply leave a small amount and invest the rest using your internet banking account. This is more powerful than other investing routines like RD and SIP. You are ensuring that balances don’t stay idle. Yes, you need a default list of products to invest in. That is a yearly list you can make in advance. Simply invest the surplus each month.

Second, record at least one asset a month in an excel sheet. Begin with your house, jewels, FDs and go on to your equity shares, mutual funds and all else. You just need to put in the cost, the quantity, where it is held, and if possible the current market value. Your list of assets when complete is the single document you need to monitor, manage, reorganize and bequeath. One sheet, or one paper, holding all assets. More powerful than you can imagine. I understand that you have been meaning to make this list one day, for many years now. Begin with one line, it will get done.
Third, identify bank accounts that you no longer need. We are all guilty of opening accounts with various banks as we changed jobs and moved. Today with the PAN and Aadhaar linking them all up, it makes no sense to have so many accounts. You have meant to close them but then it is linked to some investment, some bill payment or some monthly income or pension. Take them up one by one. Modify all references and close them except a couple. You will do your family a favour.

Fourth, resolve to make all gifts on all occasions in cash. Figuratively, indeed. Give a cheque or a gift voucher. Stop buying stuff that is never used. Worse, don’t give gifts that will simply circulate indefinitely. In your mind you think that the object you give will invoke fond memories of you in the others’ minds. Think for a moment—will your grandchild remember the stories and games or the golden anklet you bought when he was a year old? Move away from frivolous gifting.

Fifth, postpone the spending decisions. Resolve to take a month at least before spending a large sum on anything. You will be surprised how many of these spends do not seem as important as they first did. Before “investing” in a holiday time share, before changing the car, before remodeling the kitchen, stop yourself. If it is really worthwhile the decision will stick even after the pause.
Sixth, make one donation every year. However small. But resolve to give something away purposefully. Thinking too much about giving away something most often leads to change of heart. Sometimes we play favourites. We ask if the donee is worthy of our donation. Giving need not be so complex. Tell yourself that you will pay the college fees of one child on your birthday. Simple, right? It will make a huge difference to that child’s future.

Seventh, pause before you clear your home of trash. Yes, that sounds awful. But a trash audit as we call it in the composting world, is a good way to examine your consumption habits. A zero waste home ensues if we take the time to consider what we are trashing and ask ourselves how it ended up at our home and why we now trash it. That habit is powerful not just for kitchen and household trash, but everything else we throw out too—clothes, electronics, art, furniture, gadgets. You will discover the real you when you muster the courage to ask yourself the tough questions. And hopefully your consumption habits will become more sensible.

Eighth, identify one money habit that you hold as secret. It could be your penchant for day trading; your loans to friends and relatives that never came back; your credit card dues that scare you; your loans that you failed to repay; your paperwork you failed to complete; your craving for new jewellery or gadget; and so on. There must be something you don’t talk about. Tell yourself you will talk to one person this year. Someone, anyone. Allow yourself to begin setting it right by hearing yourself talk about it. Don’t deny or justify, just plain truth will do.

Ninth, make one budget this year. It is so yesterday to make budgets and keep accounts. No one does it. But there is still merit in making an effort to contain some expense to a plan. Just one expense. Your annual holiday. Your weekend eating out. Your Diwali celebration. Your wardrobe rehash. Just make a budget and allow yourself the process of planning, allocating and sticking to it. You will know what kind of finance person you are. That might be a valuable insight.

Tenth, break one annoying money habit. Your friends and family would have had enough of that habit. You know it and you don’t need me to tell you. Resolve to let that go so you win hugs and cheer. Happy New Year!

(The author is CHAIRPERSON, CENTRE FOR INVESTMENT EDUCATION AND LEARNING.)

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