Tuesday 1 January 2013

Simple New Year Resolution to handle Personal Finance

Simple New Year Resolution
to handle Personal Finance


At the outset, wish you all a very happy 2013!

We're all aware of the extent to which we tend to execute our new year resolutions. Still, I'd like to give a single resolution for each of you in the arena of Personal Finance.

When we have a single resolution, it not only becomes easier to remember and execute it, but it is also likely to generate more "guilt pangs" if you don't do so.

Hence, here's my "simple" suggestion for each of you:

  • For those of you who are NOT maintaining an account of all your expenses, including day-to-day expenses, start doing so in 2013. If possible, start maintaining your accounts in an Excel File, so that you will be able to easily classify the expenses based on the nature of expense and analyse the same when appropriate.
Or,
  • For those of you who are already maintaining an account of your expenses, start doing a review of these expenses (at least) on a quarterly basis. This will  enable you to identify and understand where your money is going. (I'm suggesting a quarterly review as anything less frequent will be meaningless and anything more frequent will not be done!)
Or,
  • For those of you who are already maintaining an account of your expenses and are also doing a periodic review of these expenses, do a "Pareto Analysis" of your "Top expenses" to explore the possibility of partly reducing those expenses where appropriate (so as to increase your savings) and to partly increase those one or two categories of expenses where you are aware that you need to devote more money, but are not currently doing so.

In December 2013, I would like all of you to ask yourself as to what happened to the above resolution.

Regards,

N

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1 comment:

Anonymous said...

Good thought sir. I would suggest a free and open source tool GNU Cash to track income and expenses.

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