Make resolutions to spend judiciously and manage your finances better

This might have been your story last year. You got a hefty bonus for your good performance, so you went on that dream vacation, bought latest gadgets for your children, and your investments in shares kept rising for the fifth year in a row. So, all in all, you were happy guy—but how did you feel at the end of it? It is only the second month of 2008 and you might be running around making investments to save income tax. You might be having outstanding credit card bills to pay and loan repayments from last year. So you just might end up managing on a shoe-string budget in February and March, and this is the same story every year. Want to make a smooth and easy transition to the new financial year then here are five ways:

The stock markets might have helped you double your investments in 2007. May be your colleague have dabbled in stocks of small companies, invested less, and still managed to make much more than you. This year, you resolve not to feel left out of the party. Karthik Jhaveri, a Mumbai-based financial planner, says that no matter how much time he spends comforting clients that the money they made is good and that they have taken aggressive steps to meet their financial goals, they still feel that others have done better than them.
Whether it’s a white-collared techie or simply a beginner, people tend to think that the grass is greener on the other side. There used to be a time when planners such as Jhaveri find difficulty in convincing clients that it was important to exercise caution in exposure to equity markets, that there were risks associated with buying stocks aggressively. Few weeks back there was a steep market fall which has changed that. “People who were overconfident about making money have realized that the party doesn’t continue forever,” says Jhaveri.

Another financial planner Gaurav Mashruwala, a Mumbai-based financial planner, is helping a young couples to overcome the stress caused by credit card bills. Between them, they earn more than Rs30 lakh per annum. Last Diwali, they had gifted each other Rolex watches worth Rs12 lakh. Everything was going well until a few months later, when the credit card statement showed a huge outstanding, and it had become difficult for them to manage the repayment.

According to Mashruwala there has been increase in the trend of taking a loan to feed lifestyle. ‘Buy now, pay later’ seems to energize a consumer mentality where plastic is the preferred mode of payment. Althought Personal loans are not bad in theory, but the end use should be monitored. One must ask itself why you need the loan—to fulfil a need or a desire? One should remember that a personal loan taken for spending doesn’t create an asset, unlike a home loan.

Must keep a stock of all your investments across shares and mutual funds and your various bank accounts regularly. Though Automated teller machines (ATMs) have indeed made banking easier. But do you really have to wait to go to the ATM to check your bank balance? Mashruwala noticed that some of his clients do not get their bank passbook updated for several months. In case you are managing your investment portfolio on your own, then also maintain a record of your demat account or mutual fund statements.

Never get tempted by the great bargain and exchange offers if you don’t really need them. Make sure that the expenditure is accounted for in your monthly budget. Try to stick to what your financial planner has drawn out for you. Buying groceries on your credit card at the end of the month can be avoided if you stick to the budget.


Make sure not to spend too much, not to indulge in sudden spending, and this is not such a difficult task. List out your deteminations and post them on your desktop, refrigerator, and even on your mirror. Tell your family, friends and relatives about it—they may help in remembering your resolutions.