The month of April marks the beginning of the New Financial Year. What better time could there be to take charge of your finances and make the right decisions with respect to your savings, investments, insurance cover and tax saving ideas? If you have not started your financial planning, then now is the right time to act on it so that you can complete this financial year well.
Create a budget set a goal
First step is to design your budget for this financial year. To make a budget, you need to note down the anticipated annual income for this year and the expected expenses such as existing loans, rent, medical expenses, and kids’ education and so on. You should also take into account other expenses such as travel, lifestyle expenses and entertainment expenses other than the priority expenses. By listing down your approximate expenses, you will get an idea as to where you are spending more. Once you know this, you can allocate funds to priority items and try to reduce other expenses. This will help in saving money which you can invest wisely to earn good returns. Another important part of creating a budget is to set a financial goal. Your financial goal for this financial year could be anything from opening new investments to buying a car or taking that long desired vacation.
Savings and investments
The next step is to plan your savings and investments. Once the budget has been framed, it makes it kind of easy to allocate funds for your short term needs in the form of savings and for your long term requirements in the form of investments. It is recommended that you contribute to your savings and investments on a monthly basis as you would do for your priority expenses. You should also first analyze your previous savings and investments, see where you stand with your financial goals and adjust your savings and investments for this financial year accordingly. If you are going steady with your investments, see if you could venture into any other new investments this year. By accelerating your financial goals, you could help yourself retire earlier or retire with an even better corpus. Apart from this, you should also concentrate on your emergency funds. You should always have an amount that would cover your expenses for a minimum of 6 months and you should never touch this amount.
Plan your taxes
Tax planning is also an important part of any financial planning. Rather than waiting until the financial year end, it is good to plan for your taxes at the beginning of the financial year. This will help you to avoid last minute hurried investments that you will be forced to make without much research. Planning your taxes in advance will help you to not only save more on taxes but will also help you to earn better returns on thoroughly researched investments. So, get in touch with your financial advisor/ tax consultant and plan your taxes now.
Try to clear your debts
Whether it is a home loan or a car loan, take account of all your debts at the beginning of the financial year. Clearing your debts should be your priority. You should try to clear the most expensive debts first and then move down the ladder. Apart from home loan, which would help you to save some taxes, you should make sure to clear all other loans as soon as possible. Never accumulate any loan on credit cards as their interest rates are astronomically high compared to all other loans.
Take account of your current insurance covers including your health cover. If you do not have a proper life insurance cover already, sit with your financial advisor and find out the right amount of cover that you would need to protect your loved ones and buy a policy as soon as possible. You should also check the status and cover of the health insurance for yourself and your family members. Make sure that all your insurance policies are up to date without any dues and also have a sufficient amount to keep up with your current standard of living. If you find that your existing insurance cover lacks sufficient funds, then buy an appropriate top up for your policy.
By following these 5 simple steps you can start this financial year in a good way and you can be sure to gain more wealth at the end of it. These steps will also help you avoid the last minute tension and stress that you might have to face otherwise.