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Top Three Financial Resolutions for 2013

, January 3, 2013, 2 Comments

With 2012 coming to an end, it’s time to ponder over your financial performance during last year. Most of you will find that there have been many financial gaps still left to be fulfilled. There would be many financial promises not kept during the last year.

However, all is not gone. End of 2012 also signifies a new beginning in the form of 2013. You still have an opportunity to finish the unfinished agenda and change your financial life for better. You still can reduce financial stress and achieve financial freedom by sincerely adhering to the following three financial resolutions:

1. Get Financial Protection

The first resolution is about getting adequate financial protection on all fronts. Ask yourself the following questions:

  • Do you have adequate life insurance to take care of your dependents in case of any unfortunate event?
  • Have you bought adequate health insurance to protect yourself and family from ever increasing medical costs?
  • Are you adequately covered for disability, an area generally ignored by most people?
  • Do you have a Critical Illness Cover?
  • Have you protected your assets – house, office, car, valuables etc.?

The answer to many of these questions would be a ‘No’ and that should be taken as a wake-up call. So, get financial protection one by one in the above mentioned areas.

2. Make Savings a Priority

This year move from ‘Residual Savings Approach’ to ‘Prioritized Savings Approach’. The more you will save and invest, sooner you will achieve financial prosperity. So, instead of beginning with spending every month and then saving & investing whatever is left, make savings a priority now. This resolution will not be possible without formulating and adhering to a budget. If you spend everything you earn, you will never be wealthy. Spending less than you earn is the only way to achieve long-term financial security and budgeting helps you in doing so.

3. Say ‘Good-bye’ to Agents

Lastly, it’s high time to move from ‘agents-based FREE advice’ to ‘consultant-based FEE advice’. Remember, there are no free lunches in life and you have always been paying for financial advice even through agents. The only difference was that it was indirect payment to them so far paid in the form of commission and other charges. You were paying and still not getting the best advice. Isn’t it a good idea to hire a Certified Financial Planner by paying fee directly and get unbiased advice that suits only your interest?

The above resolutions will act as a guide to help get you where you want to go financially. However, making New Year resolutions is easy, following them is not. Research says that only 12 percent of people stick to their resolutions as it requires sincerity and discipline. Most people make their resolutions pointless as they stick to them for about a month and then go back to their old habits. Hope you will be among the 12 percent sincere people and add value to your financial life in 2013.

About author
Dr Naveen J Sirohi is a Ph.D. in Commerce from CCS University and a Certified Financial Planner. Currently he is Assistant Professor (Finance) in the Department of Management at BCIPS, New Delhi. He has more than 10 year of experience including HDFC Bank and Corporation Bank. His domain expertise include Personal Finance, Financial Management, Risk Analysis & Insurance Planning, Retirement Planning, Taxation, Security Analysis & Portfolio Management and Financial Statement Analysis. Dr. Naveen also runs a Consultancy firm, PRUDENT ADVICE, providing Financial Planning services assisting clients achieve financial freedom. ...more
  • Rajivahuja

    I have exprienced first hand that even fee based advice is injurious to your financial health. The so called financial advisor whether working for a bank or otherwise is more conserned about the commissions/bouns he/she is going to get than the benefit you will be getting. So the final onus is ON YOU.

    • Hi Rajiv,

      First of all we need to distinguish between financial planning advice and investment/portfolio advice. A fee-based financial planner is more of a strategy maker and takes a comprehensive view on financial matters. As such, he would be indifferent to your implementation part. He won’t mind much whether you execute/invest through him or not and hence won’t be much interested in the commission/bonus. On the contrary, an investment/MF advisor generally have a narrow approach concentrating only on investments and is more interest in execution/commission/bonus etc.  

      Also, someone working for a bank/institution has high probability of being biased and having a hidden agenda as he will be under pressure either to justify his job or is tempted for high performance-related incentives. 

      I recommend you go for a Financial Planner who is (1) Certified, (2) Experienced (3) Independent (i.e. not representing a Bank/Institution), (4) Genuinely Fee-based (i.e. indifferent to how or through whom you carry out your investment recommendations). 

      In the end, there have always been good people & bad people, and both will co-exist in future as well. Having a bad experience doesn’t mean that all people in the business are bad. But if you can DIY (Do It Yourself), thats definitely great; but it’s not an easy thing to manage. 

      Have a Rocking 2013 and beyond….