Making a new year’s resolution. How about considering a financial resolution for 2022? The financial resolution can help you increase your financial fitness and hopefully inspire you to stay committed to it the whole year-round.
While nothing can be better when life seems easy and everything working out just as desired. But due to lingering concerns about COVID-19 variants, if someone comes across life-altering experiences say the death of a spouse or partner or loss of a job due to a major shift in the economy or disability due to accident or sickness or say health concerns due to any critical illness, these disruptions could derail their journey in a significant way.
Proper and effective planning, however, mandates taking into consideration the “what ifs” that happens when you’re not expecting them. Taking the following financial decisions can make an individual financially healthy.
Take adequate Term life cover
The most important shield everyone must have is Term insurance. The sum insured of this is the amount your family/nominee will receive in case of any unfortunate incident such as death, disability, or critical illness. Make sure it is significant enough for your family to live a stress-free and financially independent life after factoring in inflation. One should choose the maximum available policy period as doing this will ensure a relatively lower premium too.
Health Insurance for coverage of unforeseen medical expenses
Adequate Health Insurance is the need of the hour for you and your family. Opting for a health insurance plan can help individuals reap the benefits of extensive coverage options as they grow older. Most policies have a pre-existing waiting period which is applicable if you are suffering from any pre-existing health condition. This period will be negligible while you are still young and healthy, thus giving you the advantage of exhaustive coverage that will prove useful if you fall ill later in life.
Endeavor to improve credit score above 700
Individuals having a score of 700 or more get the best credit terms. One can achieve a good credit score by paying EMIs, credit card bills, and other loans before their due date. A lower score means not only higher interest rates but sometimes denial of loans too.
Pledge to maintain zero credit card debt
Rewards credit cards offer an alluring proposition, the promise of free points and miles for each dirham you spend. Avoid getting into a debt trap by chasing rewards. Also, the credit limit might tend to get truncated, which could lead to a financial squeeze in times of emergencies.
Prepare for Unexpected Events
Build an emergency fund with your salary. One might have a job now, but who knows what might happen in the near future. The emergency fund should be saved in an easy-to-access account, such as a bank account or high-yield savings account.
Having done all this, would not only reduce your financial burden by the year-end but also instill a disciplined financial approach in your life ahead.