Resolutions for a 2020 financial vision

Here are a few steps that can help your buck travel far in the New Year, and beyond

- ANAND KALYANARAMAN

The New Year is here, and it’s time for resolutions. Never mind that many such plans may have a short shelf-life. Intent matters. And, sometimes, we miraculously do manage to translate intent to reality, don’t we? So, here are a few money resolutions that can help your buck travel far in 2020 and beyond.

Cover yourself

If you haven’t done it already, this should be the first on your list. Do yourself and your family a favour, and get enough life and health insurance. The wise don’t harbour illusions of immortality or invincibility. If your family depends on you, your absence could leave it in deep financial trouble if something happens to you. Also, illness can strike anyone, anytime, and a big-ticket medical expense can burn a big hole in your pocket.

Get your life covered for at least 10 times your annual income. If you have loans outstanding, especially home loans, make sure the sum assured is large enough to cover these liabilities, too. The best way to buy life cover is to go for online, term insurance plans that offer significant cover at relatively low premiums. For a typical family of four, buy health cover of at least ₹5 lakh with a family floater policy to start with, and increase the cover gradually through cheaper top-ups.

Build a contingency fund

Next on your list should be a contingency fund. Emergencies — job loss, calamities, sudden major expense, etc — can strike without warning and drain your finances. To prepare for such rainy days, build up a contingency fund that’s about six to 12 months’ expenses including loan repayments. Don’t take risks with this money and chase returns. Put it in safe bank FDs, post office deposits, or in lowrisk liquid debt funds that you can easily access. Use this money only when there is an emergency.

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