Article written by Sherin Dev; Join me in Twitter / Facebook
This is my first blog post in the year of 2011. I thought my writings in this year 2011 would start with two most important financial resolutions for readers to set and work throughout this year to achieve high success and financial prosperity in the following years as well as life time.
Before coming to the point, to those who are still confused, just want to explain what is a New Year resolution. It can consider as a self promise to achieve a pre-determined goal in the year. This can be anything, but become beautiful when it is simple to achieve, realistic and drive huge advantages to the life throughout the life span.At the end of my thinking and discussions with the friends on the most important financial resolutions everyone required in this year, I conclude it to two as follows. I am sure, when set and work for this, would bring to you the utmost financial success throughout the life. Compare with any financial resolutions, these two are the most important among everyone. These are highly achievable, realistic and lead to success.
Resolution 1 – Become Out of DebtOne of the beautiful days of everyone’s life is living without debt. Life with debt is painful. Set your financial resolution to become debt free at the end of this year. Being debt free not only helps people to enjoy family life and also build wealth gradually by planning the investments with sufficient money.
Here is some essential steps to become debt free at the end of this year.
Identify the income source as the first step to work on debts. Once done, create a monthly financial budget by avoiding all unnecessary expenditures and stick on that whole year. The next step is to identify all the debts and priorities it in the basis of high interest to low interest debts. Work to pay off all the debts that have huge interest rates. One by one, work to completely pay-off all the debts as early as possible.Never plan to invest money when working with this resolution. Making of any investments when you are under debt becomes useless because finally all the profits from those investments would go to pay off your debts. Be debt free before making any investments.Never plan for any goals that required huge money. You have time to plan such things immediately after out of debt. Avoid using credit cards, taking unnecessary loans, both are unsecured and eat lots of money as interest. Work your best to completely pay all your debts at the end of this year. You have options like discussing with family members, qualified financial planners, those who worked to completely out of debt, to get good ideas on how to properly work for this. Try to welcome your next year 2012 as a debt free citizen.
For further reference, visit the article: Essential Steps to Become Debt Free
Resolution 2 – Creation of Emergency Fund
It is essential to create an emergency fund to deal with financial uncertainties and emergencies. Especially if you are living with family and the only bread winner, requirement of an emergency fund is ultimate. There is no successful financial plan for any individual’s life without having proper emergency fund in line. Whenever working to become debt free, ensure you have secured an emergency fund equals to your 2 months budget amount. Deposit the fund to a savings bank account or any place where capital protection guaranteed and have superior liquidity.In reality, creation of an emergency fund would happen before starting your actions to become debt free, but here the emergency fund size would be less than compare with a full financial plan. If your first resolution for this year is being debt free, then give priority to create an emergency fund immediately after the creation of your monthly budget, as said in the first resolution above. This would ensure you have sufficient money to meet any uncertainties while you working to become out of debt and no money in hand than what planned in the budget.You even have option to create and secure an emergency fund while planning for the first resolution to become a debt free.1. Add a portion of your income to the emergency fund purpose in each month and include this in your budget. The best way to deal with this without failures is, open a recurring deposit with your salary account. Bank would debit the prescribed amount in each month automatically thus; you can create an emergency fund.2. Other than main income, any additional unexpected money, that have not considered as your income source in the monthly budget, should go to your emergency fund account. Don’t use such money to pay off debt until you build sufficient emergency fund.3. Work part time or home business to create additional income. Use this to the creation of emergency fund and later use it to pay off all the debts.You can even plan more ways to create emergency fund and have options to identify the money sources for that. Once created an emergency fund, you are now free to stick with your tight budget and work to become debts free..Please note, the above emergency fund should not confuse with the term ‘emergency fund’ frequently uses with financial planners. Later would come with huge amount that what we have not mentioned here. Our emergency fund as per the resolution two would work as a buffer to protect you from unexpected financial emergencies when you are in the middle of actions to become debt free.Once you have completely out of debt, you are free to move with a financial plan for life. Below two article would be a starting point to learn about what is financial planning and how to create one for you and family:
1. Guide to the core of family financial planning
2. How to Make your life financially stable and successful