28 Dec, 2023

New Year , New Ways of Securing Your Financial Dreams!

As the year 2023 comes to an end, hopes and wishes also come alive with the joyous occasion. A house, bigger bank balance, ideal getaways, and most importantly, stable finances are what we aspire to. But in Nepal, where the economy is constantly changing, realising these goals means modifying our financial plans. Securing a financial future requires creative thinking because of the shifting dynamics of trade, fluctuating inflation, and declining savings and lending rates. Together, we will examine the economic landscape of Nepal and discuss strategies for achieving your financial objectives for 2024.Understand the macroeconomic situation (as of Mid-November, 2023/24,

NRB)Declining interest ratesDeposit and lending rates are trending downward, which presents a unique set of opportunities and challenges moving forward. On one hand the decreasing base rate of banks makes loan options lucrative but so are hurting savers' profits.InflationInflation in Nepal is at 5.38% as of Nov 2023 . While budgeting our finances, we must always consider adjusting inflation for better financial planning.Trade and remittancesRecent declines in exports and imports data indicate that Nepalese consumers are getting cautious about their spending habits. But a surge in remittances indicates some hope that the economy will recover gradually.Growing Foreign exchange reservesNepal's healthy balance of payments and growing foreign exchange reserves ensures some stability and confidence in recent times. Additionally, the government's focus on revenue collection and emphasis on increasing lending for the private sector is starting to create a favourable economic environment.Accomplishing Your Monetary Objectives in 2024: 1.Have a Diversified PortfolioAs the saying goes “Never put all your eggs in one basket”, avoid putting all of your financial assets in one place. In a low-interest-rate environment, mutual funds, long term fixed deposits, and even well researched stocks can provide higher returns. Always remember that diversification increases the possibility of generating long-term wealth and in Nepal’s context, where the investment tools are already low, diversification helps to lower risks to a great extent.2. Make Financial Education a PriorityWhen it comes to money, knowledge certainly is power and with proper financial knowledge financial goals can be achieved with ease. Engaging in workshops, reading blogs like this one, and consulting with knowledgeable financial advisors can be of utmost help to be financially aware. Always remember that people with knowledge make better choices regarding money.3. Adopt an entrepreneurial mindsetLow interest funding by banks in the sectors like agriculture & production in Nepal can be a good option for considering self-employment opportunities for yourself. By carefully identifying market opportunities and developing a sound business plan, it is often a smart move to start own ventures to mitigate job risks that might arise if the economic conditions become turbulent.4. Utilise TechnologyAdopt digital platforms for financial transactions and investing. Use of financial apps, budget tracking apps, E-wallets and mobile banking apps offer convenience, transparency, and an easy way to track, budget and forecast your spending patterns.. But we must always be alert for apps that are prone to scams and might take our personal data for illicit gains.5. Always focus on the bigger financial pictureWhenever you are planning to build a house of your dreams or saving for your kid’s higher education, don't lose focus on the bigger picture. Smart financial planning and cautious spending can put you ahead in life enabling you to achieve the financial dream that you always long for.Adapting to ChangeYour financial plan should be dynamic, just as the Nepali economy is. The ideas and strategies that you use to obtain your financial goals must align with Nepal’s economic landscape. Financial planning is a lifelong learning process and one must modify the strategy as situations change. You must understand that achieving financial security is a process rather than a goal. In 2024 and beyond, may you successfully understand Nepal's economic landscape and realise your financial aspirations with the correct mindset, careful planning, and a dash of creativity.