Only a few days are left for 2023 to kick in, and at this point, most people might be planning to make some new resolutions. Among these, financial pledges related to investments and tax planning of all sorts are generally high on most promise lists. Given that, let's take a look at these resolutions:

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Maintaining cash reserves for emergencies

Everyone should keep a reserve of cash for unexpected expenses, like car repairs or medical issues, as these costs continue to rise. According to financial advisors, one should have an emergency fund that covers three to six months of living expenses.

Never being without health and life insurance

Being without coverage could devastate finances. There were instances in the last two years due to COVID-19 when fundraising requests had to be made for those undergoing expensive hospitalisations or families being financially drained because of a breadwinner passing away after an expensive treatment.

In 2023, individuals should pledge never to put their family in this sort of situation again. It must be the resolution to have term insurance to cover life risks and health insurance with adequate top-ups to cover everyone in the family.

Minding the debt

It's important to be mindful of high-interest debt. Individuals should use credit cards smartly online instead of cash to earn discounts, cashback, and other rewards. However, it must be the resolution to pay off the dues in the monthly cycle. A clean credit history helps to head into a financial emergency because individuals can use more of their reserves to service daily needs instead of debt.

If somebody has big loans, it will help to have an emergency reserve to dip into to pay their EMIs during periods of unemployment.

Investing in a plan

Individuals should never enter an investment just to save taxes or because a friend told them to. They should segregate investments based on short, medium and long-term goals and not chase the season's flavour.

Instead, they should invest in many asset classes per their goals and risk appetite so that when emergencies strike, individuals have a well-diversified portfolio that can perform in any economic weather.

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