Here are 7 key factors based on which New Year resolutions should be adopted in order to ensure a financially successful year:

1. Savings - The Right Approach

People generally have the tendency to spend first and then save. This is the wrong approach to saving money. Saving should be the first and most important step. An individual has to set apart a percentage of his/her salary and other income as savings and the rest of the money can be utilised for day-to-day needs, etc.

Tip: Automate monthly fund transfer from your primary account to other savings and investment schemes. This helps to achieve financial goals at a quicker and more efficient pace.

2. Safety First

Risks and profits are correlated. Only if risks are taken will there be a higher probability to make a good return on investment. There are various other financial and non-financial risks that individuals take on a day-to-day basis and hence it is important that people make sure that they and their family are insured. Taking insurance isn’t the only thing, the choice of the right coverage is of utmost importance.

Tip: Term insurance is the most affordable and beneficial form of insurance.

3. Budget Planning

Expenditure is unavoidable. There are various things from basic day-to-day essentials to luxury items that are purchased in order to suit an individual’s lifestyle and needs. But just as expenditure is a constant factor, it should be complemented with efficient planning. Once an individual plans his/her budget, money management becomes easy. Budgetary planning is a reliable method to ensure financial security.

Tip: Make short term and long term budget plans. This would help in making wise financial decisions for the present as well as for the future.

4. Health Insurance: Key to Worry-free Living

One of the most neglected aspects of financial planning and a key area of concern is health care; incidentally also one of the primary needs of an individual. The costs of availing health care have risen dramatically over the years. It has become challenging for an average household to meet their medical expenses, especially those that are unexpected. In order to ensure that in the event of a medical emergency the individual and his family members are safe from financial ruin, they have to purchase an appropriate health insurance plan.

Tip: Scrutinise the coverage and terms & conditions of each health insurance scheme to ensure it meets the specific requirements of the individual.

5. Investment - A Step toward Future Financial Gain

Investing in the right scheme is another priority to save right and earn better returns. This New Year each individual should resolve to focus on capital allocation and distribution in investment schemes that offer good returns.

Tip: Consider this mantra - Equities are for the long-term and Debt is for the short-term.

6. Loan and Other Payment Tracking

Availing loans is both a boon and a bane, depending on the need and the capacity to pay back the loan. Individuals should keep in mind a strict financial resolution - Do not take loans to fund your extraneous expenses and lifestyle, or to re-invest in various schemes. Set a maximum percentage of your take home income apart for paying EMI’s, this shouldn’t be exceeded.

Tip: Pay loans that have high rate of interest first.

7. Fund Organisation

An important resolution for the New Year should be the proper allocation of funds as per needs. Individuals should set apart funds for each of their needs. E.g.: savings, groceries, clothes, jewellery, travel, leisure, emergency funds, medical expenses, etc. A well-organized and well- executed fund allocation method ensures ready availability of funds.

Tip: Make a fixed fund and set it apart for regular expenses. Other expenses can be added or subtracted periodically as per fluctuations in market conditions.

Adopting these simple measures can go a long way towards ensuring effective personal financial management which in turn will enhance savings and maximise returns.