The year 2022 was the hardest year and such hardship hasn't taken a pause since the Covid pandemic outbreak. War, inflation, geopolitical tensions between China and India, and fiscal deficit issues, nothing seems like improving, even though India has somehow managed to show up as a strong nation in front of other countries.
All these issues have affected the economy, stock market, and personal finance quite adversely. The prime reason for making financial filtration is not only prevailing economic issues but also building good financial habits every year.
What is financial filtration?
In financial terms filtration means when you remove a few non-value-adding habits or products from your lives so that you can make your life financially stable. Here are the filtrations you need to make in 2023.
Get rid of non-performing investments
Sometimes, you make investments due to the influence of others, without doing much research, or maybe because of prevailing economic scenarios, a few investments might have lost their value. If you still hold these types of investments, the new year might be the best time to get rid of the same.
Also, if a few investments are not able to beat your personal inflation, you can get rid of those investments. If you haven’t yet calculated your personal inflation, the new year could be the best time to calculate your personal inflation and make investments accordingly.
Sell off bad debts in your house
Your financial filtration may involve items in your house that are leading you towards liabilities or increasing your expenses only. If inflation keeps rising in 2023, you need to reduce your fixed expenses as variable expenses of your house cannot help you in fighting inflation. Bad debts in your house could be anything that is not generating revenue.
For example, if you own a car and you do not use it for regular purposes. The car is quite old enough to increase pollution and maintenance expense is still high. You can either sell the car off and start making an investment for buying another car if you really need it or you can put it into a car-renting application so that the car itself can bear its maintenance expenses and get you some profits as well. This is how the filtration of bad debts in your house can be used.
Reduce your wants
You have already been through a lot either because of job loss or it is inflation outbreaks. It was a bad year for your finances, don’t you think that it is high time to reduce your focus on wants and shift it toward investment and insurance? The priority should be keeping you and your family financially secure then you can spend on your wants.
Financial security may include life insurance, health insurance for you and your family, and emergency funds for your uncertainties. A new year could be the best time to take a resolution to reduce your wants significantly this year to tackle the likely unfavorable economic situation of the country.
These three filtrations will help you maintain your financial stability and let you live financially stress-free in the coming years as well. Everything else can wait but financial security can’t, especially in the case when the future of large economies is not looking well.
Anushka Trivedi is a freelance financial content writer. She can be reached at anushkatrivedi.com