I Will Understand What I Want From Life
The idea here is to try and understand your needs by identifying what motivates you. This may require a fair bit of introspection. Once you have identified your motivation, it will be easier to link it to your financial behaviour.
For instance, instead of telling yourself that you need to set a budget, ask yourself why you want to do it. Is it because you want to pay your bills on time and not run out of money at the end of every month? Or is it because you want to save more?
Another example could be understanding why you want to save. Often, we end up saving randomly without having a goal in mind. Is it to fund the next holiday or our retirement or children’s higher education? Once you have this answer, you will know how much we can save and for how long.
I Will Identify And Tame My Psychological Biases
Behavioural biases can affect our financial lives greatly. One such bias is status quo bias, where we tend to continue with our acts even to our detriment. For example, buying from our decades-old store even if there are cheaper options available.
Then, there is confirmation bias, where we tend to seek information that supports our belief while ignoring those that are contradictory, such as seeking positive reviews of a stock we have invested in and ignoring views that are critical of its future growth prospects. Similarly, there are other biases to identify and overcome.
Says Renu Maheswari, chief executive officer and principal advisor, Finzscholarz Wealth Manager, and a Sebi-registered investment advisor. “To have consistent positive financial behaviour, investors should take help of fiduciary advisors who can guide them to stick to their financial resolutions and achieve their goals.”
I Will Be More Financially Aware
It doesn’t matter whether you are an amateur or a professional, there is always scope to improve your financial knowledge.
Says Kiran Telang, a Mumbai-based certified financial planner and author of Mindful Retirement: “There is no dearth of resources for financial literacy. Financial Product manufacturers, distributors, advisors, and even the media provides ample material. There are also several courses available from various institutes that one can take up.”
In fact, you can even tap into social media for ‘tips’. But you need to be careful in choosing what to pick, as a lot of incorrect information also floats around. “People should be wary of some finfluencers. One should always check the credentials of the writer before following their advice,” says Maheswari.
I Will Declutter And Take Stock Of My Investments
We, typically, tend to invest a small amount somewhere and then forget to account for it in the larger scheme of things. Thus, taking stock of our investments and decluttering it by getting rid of the unnecessary ones can go a long way in straightening our financial life.
Says Nita Menezes, founder and CEO, Financially Smart, an edutech firm. “You need to sit and think how you can clean and declutter your essential financial documents or other things of the house? It would surely pave the way to wealth and abundance. It’s very important to live in an organised and systematic manner.”
This would also include taking stock of your cash flows and savings. You could use an excel sheet, an app or a diary for the job.
I Will Take It Slow And Not Judge Myself
Once you set your financial resolutions, you might want to start following it immediately. But as that may not be always possible, try to start small.
For instance, if you want to reduce your eating-out bill by, say, `10,000, then you can start with reducing it by `2,000 in the first month and then gradually reach the planned amount.
A similar strategy can be applied when it comes to investments. “Small changes that become a part of your life are easier to sustain. In investment, if someone needs to save, say, `50,000 for a particular goal, it might not be immediately possible. However, starting to save whatever is possible and increasing the amount over time is much better than waiting for a time when the full amount becomes available,” says Telang.
In case you are failing to stick to your resolutions, do not get upset about it. Rather, try and identify why you failed.
“It’s important to understand that no one can stick to all the resolutions that they would have made. Allowing that flexibility will keep you motivated and help you achieve better outcomes,” adds Maheswari.
Rewarding yourself for small achievements can also help you stay on track. Start working on yourself and your finances will automatically fall into place.