Hosts: Tania Jaleel, Shambhavi Mehrotra
Producer: Paramveer Singh
In the previous episode, we told you how to set off your personal finances in the right direction
In this one, we will tell you about 20 personal finance resolutions you can make for the year 2020
We know, we know it is 10th of January, many of you would have made and broken your new years resolutions already
But these are money resolutions, there is never a wrong time or too late for those
Hi every one, I am SM and I am TJ and welcome to another episode of ET Wealth Wisdom podcast
Let us get right to it shall we
1. File your ITR on time
For filing a belated ITR by December 31, 2019, you would have been penalised Rs 5,000. If you file between January 1 and March 31 of the new year, you end up paying Rs 10,000
2. Don't wait until the last minute to make your tax-saving investments
Making your tax-saving investments at the last minute can have long lasting negative implications. Just to save tax, you might end up investing in the wrong instrument. There can also be technical problems to this.
3. Keep an eye on your investments and all related things
From your stock broker to your fund house and manager, keep checking in on your investments and the people handling them. Nobody wants to be stuck like a DFHL or a Karvy like scenario.
4. Don't give in to market fluctuations
Your investments must be primarily determined by your financial goals and not by the equity market being on a high or low. Don't make knee-jerk reactions. Stay put, only be guided by your financial plan and goals.
5. Don't rely only on your employer's health cover
Many make the mistake of doing this. A mistake because when you leave your job you are no more covered until you join the next employer. Your health insurance policy terminates as soon as you quit. Apart from this, you must also know that the cover may not be sufficient for you and your family. So you should at least buy a simple health insurance plan.
6. Watch how you drive
After the motor vehicles Act came into force from September 1, 2019 breaking traffic rules has become a costlier sin. However, did you know that these violations can impact the premium on your motor insurance cover?
That is right, the insurance regulator has proposed to introduce telematics for motor insurance. Telematics is a method of monitoring your vehicle using a GPS device fitted in it that will track data related to your driving habits, to which your personalised motor insurance premium will be linked.
7. Be careful while buying insurance from a bank
Banks generally have tie-ups with insurance companies. These agents try and push products to existing bank customers. Due to this cross-selling, many times, banks sell insurance plans to customers without telling them about the details of product. This is where most of the mis-selling happens. Most often these products are sold as an investment product promising high returns.
8. Beware of online fraudsters
When you use credit cards, digital wallets, phone banking, there is always window for fraudsters to steal your money. Stay ahead of them. Review your bank and other online accounts regularly. Check your phone banking or wallet alerts for transactions and keep an eye out for those you didn't make.
9. Put a little more effort into your passwords
Make it a rule to not set passwords that are easy to crack. Things like 'iloveyou', 'password123' etc will just not make the cut. In this case, the more complicated, the better.
10. Handle those social media handles carefully
With a lot of us taking the digital route for even the smallest of tasks, it comes as no surprise that social media has become a fishing pool for fraudsters. Many fake handles surfaced in 2019. Get the correct handles by visiting official websites or better yet, by calling the customer care number. Also watch out for fake websites and portals.
11. Close inactive bank accounts
If there are bank account/s not being used by you and just lying dormant, close these. By not doing so, you might be penalised. Also remember, if the only transaction in an account is the periodic credit of interest on the existing balance, such accounts will be treated as dormant.
12. Safeguard your banking transactions
Do not opt for saving of password option prompted by the browser while accessing Internet banking. Beware of malicious sites and apps while accessing Net banking or downloading Net banking apps.
13. Don't keep all your money in just one bank account
If there's one thing that the unfortunate episode of PMC Bank has taught us, it's that you should not put all your money into a single bank account. Urban co-operative banks especially are not well-regulated. Definitely don't fall prey to the higher returns offered. Also, each bank account has its deposits insured only up to Rs 1 lakh under the DICGC.
14. Stick to the 50/30/20 rule of financial planning
According to this thumb rule, 50 percent of the earnings after tax should be used towards necessities, 30 percent of the money should be spent on luxuries or wants/desires and 20 percent money should be saved and invested towards your financial goals.
15. Keep your credit profile clean
Not only your credit score but your overall credit profile too matters when scouting for loans. Don't rely heavily on your credit cards for borrowing, these are in fact the most expensive form of debt. Make sure that your utilisation never exceeds 40 percent of total credit limit available.
16. The more, the merrier
It is actually a myth that too many credit cards just complicate your finances. Get credit cards from 3-4 different issuers so that you are eligible for all the discounts being offered by various merchant outlets and offers resulting from tie-ups between card companies and merchants.
17. Avoid using credit card to withdraw cash
Lenders charge a cash advance fee of up to 3.5 per cent on the amount of your ATM withdrawals. Plus, these also attract interest charges right from the day of the transaction till the date of its repayment. You do not get any credit-free period to make interest free re-payments of the same.
18. Do not fall prey to festive season sale tactics
Make it a point to set aside a certain amount for your discretionary expenses for the year and stick to that. Go only by your needs and don't be blinded by discounts.
19. Diversify but don't over-diversify
Investors often believe that the way to achieve diversification is to invest in many mutual fund schemes. However, the truth is that no additional diversification is provided by investing in more funds beyond a point.
20. Personalise, plan and prepare
Make your financial plan according to your goals, risk appetite and horizon. Do your research about investment avenues, market movements thoroughly. Consulting a financial planner is a great idea. Finally, keep aside enough corpus for emergencies; it should typically be about six months of a family's monthly expenses.
Hopefully sticking to even a few of these resolutions will do wonders for your money. Try it out!
That will be all from us for this week. Come back next week for more wealth wisdom