8 Republic Day Resolutions for Building a Financial Future 2024

True financial freedom isn't just about being able to spend without worry; it's about living a life free from all kinds of financial stress. As we observe Republic Day, it's a good opportunity to quietly reflect on our financial goals.

Republic Day Resolutions to Take to Get Financially Healthy!

1. Review your Cash Flow Regularly

Keeping a close eye on your monthly cash flow helps you stay in control. You know exactly where your money is going:

On necessities, like rent, groceries, insurance premiums, and bills, or
Extra spending on eating out and shopping.

This way, you make sure your spending is in line with your income.

2. Create a Feasible Budget Every Month

Each month, you sit down and sketch out a budget that reflects reality. You might not always be able to boost your income, but you sure can visualize and manage your expenses.

Using the 50/30/20 rule:

You allocate 50% of your income to essentials like groceries, rent and EMIs;
30% goes towards wants like dining out, shopping, and vacations;
20% is earmarked for savings, including investments in a diversified portfolio.

3. Build and Maintain Emergency Fund

Every month, allocate a portion of your income to an emergency fund. While income levels vary, the goal is to build a fund that can cover 3-6 months of expenses.

Six times your monthly expenses is the ideal and advised amount;
Adjust the percentage as per your financial situation and commitments.

Start small and watch your emergency fund grow.

4. Invest for the Long-Term

Each month, commit to long-term investments to secure your financial future. Instead of looking for quick gains, focus on letting your money grow over the years.

Balance your portfolio between high and low-risk investments;
Focus on compounding benefits over time for substantial growth.

There are numerous investment options, like mutual funds and equity shares. Do thorough research before investing anywhere, though.

5. Actively Pay off Debts and Dues

List down all your debts, from credit card balances to loans. Managing debt effectively is crucial, irrespective of income changes.

Start by paying off high-interest debts, as they cost you the most;
If possible, make more than the minimum payments;
Build a habit of paying your credit card dues before deadlines to build a good credit score.

6. Have a Comprehensive Insurance Coverage

Regularly review and invest in comprehensive insurance coverage.

Invest in a term plan with a sum assured at least 10-12 times your annual income;
For vehicle and home insurance, tailor your coverage based on your assets;

In the end, make sure your spouse, kids, or elderly parents have easy access to all the insurance details and can comfortably follow the plan.

7. Have a Plan for Big-Ticket Purchases

Buying a new car, funding a wedding, or renovating your home are hefty transactions. So, the sooner you prepare for these costs, the better.

Create separate savings funds for each goal.
Aiming to save about 10-20% of your and your partner's combined income in a joint savings account for the wedding fund could be a starting point.

This approach will help you avoid debt and manage your finances stress-free.

8. Have a Plan for Retirement

For a comfortable and financially stress-free future, you must start contributing to your retirement savings now.

Aim for a retirement fund 30 times your current annual expenses.
Diversify with options like PPF and NPS.

In the end, revisit and adjust your retirement plan to reflect any changes in income, expenses, or retirement goals.

To Wrap Up

Getting to financial freedom might not be super easy, but it's definitely doable. Start saving and investing as early as you can. Your risk tolerance and income will guide your journey. Stick to a well-thought-out plan, and you'll be on your way to hitting those financial goals right on schedule.