Sticking to a New Year resolution is not an easy task.

However, there are some resolutions that you must make and stick to. Preparing a new financial plan is one such resolution. Face it: Each year, you hope for a larger bank balance and a smaller waistline. But the situation at the end of the year is just the opposite. This year, to ensure that does not happen; you must come up with a solid financial plan.

Sounds boring, though, doesn’t it? So why not think about it in terms of food. Take any dish you love, and now compare it to a financial plan.

Here’s how you create a dish that improves your financial health in 2017 and beyond.

Financial Plan: A Quick Recipe

• Ingredients

• Income
• Expenses
• Debt owed
• Investments
• Tax

• Procedure

Step 1: Understand your income and expenses

First, take note of where you earn money from and how much you earn. Then compare that with how and where you spend most of your money.

Look at your main expenses. Does the majority of your salary go in EMIs? Or, are you using your savings to set up a business? Once you know what your expenses are, you can include them in your financial plan. Then make the correct provisions for large expenses.

This helps you understand your own money first. After all, most wrongfully estimate their expenses and income. This then allows you to manage the rest of your money effectively.

Step 2: Analyse your debts

Have you streamlined your debts such as a home loan or a business loan that you are diligently paying off? Or do you have an unmanageable debt like an unpaid credit card bill? Whatever be the case, you need to bring all your debts under the financial plan. Once you are aware of your debts, you will be in a better position to pay them off.

Then decide which debts are costly. These need to be paid off first. Credit cards and personal loans, usually, are the costliest. Home loans, meanwhile, can continue as they help you reduce tax.

Step 3: Set up investments

Your money is not to be just spent or used to repay debts. It’s to help you in the future. And for this purpose, your money has to grow (No, not like on trees).

So, a healthy financial diet must include investments. These could be new investments (if you have never invested before), or an upgrade of your existing investments.

If you are a new investor, then look at easy-to-understand options like Mutual Funds. With Aditya Birla Sun Life Mutual Funds, you could invest in mutual funds online too. You are essentially handing over your money to an expert to be invested on your behalf.

But remember; don’t do this in a haphazard fashion. Planning ahead always helps. This means, allocating a fixed percentage of your income for investments. And of this fixed amount, decide how much will go into which investments and for what goals.

This aspect of the recipe has to be tailor made for you. Like adding a pinch of salt to taste—it depends on individual preference.

Step 4: Review your current portfolio

If you have already invested, then it’s time to review your prior investments. Answer these questions:

• Are you earning enough returns or are there better options out there?
• Will you be able to accumulate enough wealth to achieve goals?
• Are all your investments working well?
• Do you have any loss-making investments to weed out?
• Are you being too risk-averse or taking too much risk?
• Are you insured enough?
• Are you saving enough tax by investing right?

By answering these questions, you will know if you are on track. Otherwise, take your money out and invest in other options like Mutual Funds. The plan will help you to track your investments and, thereby, your earnings.

Step 5: Save tax

Yes, there is a high possibility that you are paying too much tax. And yes, this could be controlled.

Study your salary structure to make it more tax-efficient. Invest in tax-saving options like Equity Linked Savings Schemes (ELSS) to save up to Rs 45,000 in tax. Shift to more tax friendly investment options like Debt Funds (as compared to conventional saving products) and Equity Funds. Birla Sun Life Tax Relief ’96 is a good option.

Related: Do you sometimes feel everybody else is smarter than you? If you're paying that much tax, they probably are.

Step 6: Be ready for emergencies

You plan to be ready for the future. This includes emergencies too. So ensure you set aside a small portion of your income every month to build a separate fund.

Never keep it in your frequently used accounts. It could get spent. Park it in a separate dedicated account or invest in options like Liquid funds, ultra-short Debt funds. Ideally, you should have enough to cover expenses for three-to-six months.

Serving suggestions

Now that you have the recipe for the perfect financial plan, give it a shot. The time is right for you to take control of your finances and help your money grow in 2017 and beyond.

Mutual Funds are subject to market risks, read all scheme related documents carefully.