5 habits to adopt in 2023 to make your money grow

A new year is synonymous with new beginnings. It could also be the perfect time to set some new money goals that you would like to achieve this year. As we all know, new year resolutions are easy to make but harder to follow, so here are five steps that you can follow to make sure you are setting yourself up for financial success.

Create SMART goals
To achieve your financial goals in 2023, it is important to prepare SMART financial goals. SMART stands for specific, measurable, attainable, relevant, and time-bound, said Anil Rego, founder, and fund manager at Right Horizons, a SEBI-registered portfolio management service provider.

It is important to have 'specific' goals such as planning an international trip with family or higher education of children or building a retirement corpus. Further, you should roughly calculate how much money you need to achieve each goal. If you can 'measure' your goals, it will be easier for you to achieve them faster, said experts. 'Attainable' means your goals need to be realistic. Relevance suggests the importance of the goal. "Each person can have 'n' number of goals. These goals need to prioritise from most important to least important," said Rego. Time-bound means the time period it should take or how many years are left to achieve the goal. This SMART goal helps in preparing a comprehensive financial plan and helping to achieve them, he explained.


"The plan will help you take the necessary actions towards achieving your goal. For instance, you know you want to buy a television within the first half of 2023. You can start by reducing your expenses by 10 per cent to achieve your goal. Save that money and then buy the television within a few months," Anmol Das, Head of Research at Teji Mandi, a subsidiary of Motilal Oswal Financial Services.

Also Read: 10 smart money moves to improve your finances, make you richer in 2023

Make your money work for you
We all know that the only way to grow money is to invest. But experts suggest that you should not follow a herd mentality while making investment decisions. It is important to identify your risk level and invest in avenues that help you to generate better risk-adjusted, inflation-adjusted returns, said experts.

"Investing can be started with a relatively little sum of money. Make smart, baby steps with your money by investing in things like Systematic Investment Plans (SIPs) that make it easy and convenient for you to invest. With the SIP method, you won’t have to worry about when to make your investments, and you’ll benefit from financial discipline and rupee-cost-averaging during market downturns," said Abhinav Angirish, Founder, of Investonline.in, a leading online mutual fund portal.

"For long-term goals, the value of the goal will increase in proportion to the inflation by the time of need. So, to cover such kind of inflation risk, it is recommended to choose avenues which deliver inflation-adjusted returns in the long term such equity mutual funds, ULIPs, direct equity, etc," suggested Rego.


Track your expenses
How much money do you make every month? How much money do you spend on groceries, electricity bills, internet connection, and phone bills? How many times do you go out to eat at a restaurant in a week? To achieve your financial goals, you need to track your cash flow. "The main step to achieve financial freedom is to determine your surplus income. This is the income that is left after the routine monthly expenses such as rent, groceries, fuel or conveyance, etc," shared Ankit Jain, Partner, Ved Jain & Associates, a Chartered Accountancy Firm.

One of the easiest ways to keep a tab on your income and expenses is to use a budgeting app on your smartphone. There are various expense tracker apps available on Google Play Store and Apple App store. Find a free (do not pay for it) app which suits your need and use it regularly to keep track of your income and spending.

"You must know where your money is going mindlessly and where you can use it to double your total capital. Setting a budget will ensure that you stick to your plan and goal. It will reduce overspending in areas unrelated to your financial objective," Das.

Pay off debt as soon as you can
Most people nowadays use credit cards and some or other form of loans such as home loans, personal loans, etc to fulfill their needs. Before availing of any new loan, one should keep in mind that the total value of the debt or the EMI doesn’t exceed more than 20-25 per cent of your income. If this increases, it can be a burden to your budget, and you won’t be able to save enough for your future goals, said Rego.

It is also important for you to consider loan closure as one of the goals while making a financial plan. This ensures that you save enough and close the loans at regular intervals and all your debt is paid off within a certain period, Rego added.

Check your portfolio regularly
To achieve your financial goal, you need to do more than just make the investment. "Measure your portfolio on a regular basis to see if you are heading towards your objective or if there are any corrections required. Any decision on the portfolio should be based on fundamentals and not sentiments or news," said Chethan Shenoy - Director & Head - Product & Research, Anand Rathi Wealth.

"Improving your financial literacy is a wise action that is often overlooked when it comes to making smart decisions about your finances. Your ability to manage your money well depends greatly on your financial literacy. Its goal is to help those with a basic understanding of finance gain a deeper appreciation for the nuances of budgeting, tax minimisation, and investment. It’s an important life skill you’ll need to keep your finances in good shape," said Angirish.