2012 – what were your hits and misses in personal finance ?

So the year comes to a close and most of us begin to chalk down our plans for how to usher into 2013. Many enthused souls will make a list of things they want to do – we call them resolutions. If you are one of those souls, how many of your resolutions relate to personal finance ? Take a check ! Not many, I guess.

While you do that, it is important to note what you did right and what you did wrong in 2012. A review of things gone by always helps you to understand what you are good at and where you need to improve upon. From a personal finance perspective, you could take things you did well to new heights and be a master at it. And for those things that you faltered at, you could start from scratch and try to do it better.

Let us look at 2 things which readers found tough in 2012. You will note that these are basic stuff and if you cannot get these things right, then financial planning will always be a challenge.

I had this email in my inbox.

Dear WealthWisher,

I cannot do budgeting. My wife and I often write down expenses on a piece of paper and do it for some days but then forget. We have tried this for 3 months now but with no success. Is there a way by which we can do budgeting and stick to managing the expenses in a controlled manner.

— Vedanta

What this means is that readers find simple budgeting challenging. Budgeting is one of main cornerstones of successful financial planning and I have previously written about how to create a budget. You can find excel sheets that help you capture your data. Hemant also does a good job of explaining budgeting and its importance here. Capturing the actual expenses can be done by many online tools – I personally use Perfios and it suffices my needs. Again, there is no one tool that can help but remember to pick on something that will help you in what you intend to solve.

And then another reader sent in this –

Is asset allocation really useful. I have not been able to use it practically in my planning as I do it myself, planners I cannot trust and they charge me more.

I do stock investing on my own and buy policies but how does asset allocation to be fit ?

—- Deven

Sigh ! So without having taken asset allocation and risk profile into the picture, how can one do investing ? Beats me ! Investors need to begin to trust someone who has the expertise – if they cannot do this then they will continue to make mistakes and lose valuable time that could haven been otherwise used to invest and make money.

As you can see from the two examples above, investors keep suffering from the basic tenets of financial planning. Many of us kept making the same mistakes in 2012 and must have lost valuable time.

Reader Kaustubh’s comments here indicates that he must have maybe lost an opportunity to invest in equity in 2012 as the previous years were a disaster for the stock markets. But equity did give handsome returns in 2012 and anyone who did not embrace the systematic investment planning route of mutual funds must have lost the game.

So we all must have missed something in 2012 and must have hit the nail on the coffin on some things related to personal finance. How did you fare ?

2013 and all the best for it

While our country was hit with scams and issues and the political survival of the government often took precedence over the economic growth of the country, I personally believe that these are blips in long term investing. All you need to do is keep investing. Remember, personal finance is simple – do not make it complex by getting sucked in the rut of all the noise that surrounds you.

I hope you liked what you did with your money in 2012 and I wish you all the very best for 2013 and A Happy New Year in advance.

Personally, I did not face any challenge and was happy with the investments I made. I took on a new home loan to build my house and 2013 will be a new challenge to manage my personal income and expense statement. However, I am ruthless when it comes to investing and always ensure that the lifestyle expenses take a hit and the right amount of money is channeled into retirement savings.

How about you dear readers ?

Why don’t you use the comments section to tell us what you think you did right this year and what you think you did wrong and want to improve upon. Also, are there any generic (non personal finance related) resolutions you have ? It will be a pleasure to read about them and discuss.