What are your new year resolutions? – #12 by Celina – General – Trading Q&A by Zerodha

Personally, I want to read a lot, become a vegetarian, and most importantly, put my money in the system.

Here is a list of things I plan to do this year.

income: I’ve realized that as income grows year after year, expenses are catching up. Earning money is one thing, managing it is another. So, starting this month, I will budget for my salary and find out where my money is going.

Damn, it’s a mystery where each month has gone.

I suppose it’s a good idea to automate things. There’s a part of me that keeps saying, “You can pay tomorrow or do it later.” Everything from SIPs to billing, I think automation will definitely benefit.

It’s funny how when you SIP manually, you’ll see the markets go up and decide to do it later. However, it is unlikely that you will return to the same level by the time in the month.

emergency fund: This should not be used simply for foreseeable emergencies. I believe having an emergency fund provides you with powerful support while making financial decisions in life. It will kind of give you an escape, for example if you lose your job or whatever goes wrong. I am sure I will be able to continue for the next six months without any worries.

insurance: I think the most important card you have to play in order to be financially strong is insurance.

  • Health Insurance: Additional health insurance with coverage provided by the employer.

  • Term insurance is like a covered call for your loans and the provision of you and your family members. I recently purchased a Rs 2 crore term insurance policy, which easily covers outstanding home debt and ancillary expenses over the next 20 years.

BTW, 2 crores cover only costs 15,000 per year, i.e. 1250 per month. There are also tax advantages.

I discovered pet insurance in October last year. My pet was undergoing veterinary treatment, and a huge bill came to settle. The doctor recommended insurance that costs only 3.5 thousand per year. If I had known sooner, I could have saved a lot of money. Any type of hospital treatment may affect your monthly budget.

religion: The hardest part of the list is to hold on to your feelings and say no. It is very easy to fall into the trap of electromagnetic interference. The feeling that you can buy anything and everything with your credit card urges you to increase your budget. However, if you do the analysis, you will realize that there are good debts and bad debts.

Home Loan: One of the most difficult decisions to make, think twice before finalizing your budget. Today, everyone around you will tell you that the interest rate on home loans has gone down, but it will be a nightmare if you take out unreasonable loans and burden yourself.

A housing loan, in my opinion, is a product for anyone who needs shelter and wants to save on taxes. Perhaps, if you live in a big city and pay high rent, then replacing it with EMI is a great idea. Again, whether or not you want to take out a mortgage is debatable. This would be a good debt if it was a necessary thing, not a luxury.

Another thing I realized is that rushing to close a home loan is a stupid idea. Instead of doing this, you could start a SIP and possibly generate better returns over time.

Car loan/travel loan/whatever loan is a big number. Borrowing for big spending can waste your hard work and force you to work more. I believe in the old-fashioned way of saving money and buying. Owning something makes you totally proud and helps you sleep well.

Invest to achieve my goals: It is very easy to calculate and give examples of how to achieve the goal. I’ve set some goals for myself, from buying a car to paying off my debts.

Prioritizing my goals based on the time period and selecting the most appropriate investment accordingly. This is a work in progress and is still being researched.

Believe me, it is much easier to spend thousands on shopping than figuring out what investments to make.

So, here you go, my to-do list. If you could share your approach or list some of the best mutual funds or insurance policies you’ve come up with, that would be great. It will be really useful.

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