10 financial rules that will ensure you are not broke in new year
New Year 2025 Financial Resolutions: Despite earning a good income, many people find themselves broke by the end of the month. This may be due to a lack of proper investment planning. By the time an emergency arises, these people often struggle to find ways to arrange money. If you want to avoid situations like this and secure a better future, saving money is essential, and for that, you may need a solid financial strategy.
As 2024 comes to a close, it’s the perfect time to reflect on past mistakes and resolve to improve in the new year. Here are 10 financial rules that may gradually fill your bank account and ensure you will never experience a shortage of money again.
Create a Monthly Budget
In the past, families would create a monthly budget and stick to it. But today, with the convenience of online payments, people often spend recklessly. If you want to save money, start by preparing a household budget. Cut out unnecessary expenses and make saving a monthly habit.
Build an Emergency Fund
Everyone faces emergencies at some point—be it a health crisis or another unforeseen situation. In these times, savings can quickly deplete. Therefore, keep an emergency fund that covers 6-12 months of living expenses. This fund will protect your savings during tough times.
Use Credit Cards Wisely
Credit cards may offer tempting discounts, but they can lead to unnecessary spending. Sometimes, the amount spent exceeds what can be repaid within the grace period, leading to high-interest debt. If you use a credit card, do so carefully and avoid falling into the debt trap.
Don’t Hoard Savings at Home—Invest Instead
Keeping savings in a drawer or locker will not help your money grow. Instead, invest it in various schemes that earn interest. Your money will grow over time, helping you achieve your financial goals.
Set Different Financial Goals
It’s crucial to have both short-term and long-term financial goals. Allocate your money between short-term and long-term investments to ensure that you have funds available when you need them. Short-term investments can be liquidated in times of emergency, while long-term investments can grow over time. Consider options like mutual funds, stocks, gold, FD, and RD.
Plan for Retirement
Old age comes for everyone, and when it does, you will need money for daily needs. It may become difficult to work physically, so it’s important to start planning for retirement early. Schemes like EPF, VPF, and NPS can help secure your financial future.
Invest in Health and Life Insurance
Many people view health and life insurance as unnecessary, but they are invaluable in tough times. Health insurance shields your savings during illness, while life insurance ensures financial security for you and your family. Consider these as essential expenses, not optional ones.
Avoid Unnecessary Expenditures
Online shopping, parties, smoking, and excessive drinking can drain your finances. To control spending, pay in cash whenever possible. Live within your means and avoid overspending to impress others. Don’t be swayed by sales or discounts—spend based on your income.
Learn New Skills and Expand Your Income Sources
To increase your wealth, diversify your income. Upgrade your skills to open up new opportunities in your career. Additionally, you can explore extra income sources through freelancing, part-time work, or small businesses. Diversifying income streams will increase financial stability.
Plan Your Taxes
A large portion of your income goes toward taxes. To minimize this, engage in tax planning. Consult with a tax advisor to invest in tax-saving schemes that will benefit your future while also reducing your tax burden. Take advantage of Sections 80C, 80D, and 80E, and consider seeking professional advice for investment strategies.