Get basics right for your finances to grow

Nice article from times

Madhu T | TNN

Mumbai: New Year resolutions for many mean quitting cigarette or giving up booze. There are others who aspire to hit the treadmill with great gusto. These days, financial resolutions like paying off credit card dues, buying adequate insurance cover, opening a systematic investment plan (SIP) with a mutual fund also find a place on the list. However, most of these ambitious plans don’t always materialise, since most people don’t have the basic financial discipline to see them through, say financial consultants.
“Paying off loans, buying a term insurance plan or opening an SIP may be the most common thing to do, but I would stress on doing basic things like keeping track of expenses, filing bills and bank statements on time,’’ says Gaurav Mashruwala, a certified financial planner (CFP).
“In some cases, we have seen that people are not even aware of the number of bank accounts they have or the list of investments they have made over the years,’’ he adds.
No wonder, ambitious financial plans fail to take off as little ground work had been done.
“It may sound silly, but we have come across many instances where even educated people didn’t have a clue about their financial health. We actually had to make a lot of queries and then find our way through a mess of papers before reaching a conclusion,’’ says a wealth manager who doesn’t want to be named. “Sure, you can hire a service to do these things for you, but that would cost you money, which you can easily save by taking simple steps,’’ he adds.
Okay, here is what they would like you to do. To begin with, start filing those statements from your bank and mutual funds. Next, start the habit of keeping track of your expenses vis-a-vis income to get a clear picture of how much you save on a regular basis. This, according to financial experts, is crucial to take important financial decisions. Now, proceed to your bank account to see how much money is lying idle in your savings account.
“People who have opened multiple salary accounts won’t even realise that they have so much money lying idle in them,’’ says Mashruwala. Keep only the minimum amount required and transfer the rest to fixed deposits or other form of debt investments, which would yield you better returns. Mashruwala also reminds individuals to draw up a will and make proper nominations for their various investments.
This is no way to suggest that you don’t have to include ubiquitous (and ambitious) financial resolutions this year. Sure, you must have adequate insurance cover, a plan to pay off outstanding expensive loans, SIP to make the best of out of the stock market.(See list: A Plan For Everyone) But don’t forget to include the basics in your list of resolutions.
A Plan For Everyone
Make an assessment of your financial status
Have a plan to retire your expensive credit
Set your various financial goals
If you have at least five year to meet a goal, opt for equity. Otherwise, stick to safer debt investments
Always have adequate insurance cover (term cover preferred) Also, make a will and nominate persons to avoid troubles in future