New Delhi: A disciplined approach can help make the most of a new financial year, especially in terms of long-term wealth creation. By modifying lifestyle with prudent financial planning, one can take care of expenses, and future goals and aspirations.
This excerpt can help guide you on how to organize your personal finances:
Write down and review your financial goals
Writing down goals will help bring more clarity to financial priorities. Anoop Bansal, Chief Investment Officer, Scripbox said, “With the valuation/bonus of the financial year, your income flow increases allowing you to plan for bigger goals. Reviewing your past goals will determine the direction of your goals for the new financial year. This step is also important to check whether your current investment is optimal for your goals.”
Create a Balanced Financial Plan
After reviewing and setting your goals, you can start making a budget plan for the new financial year by analyzing your needs, income, expenses, assets and liabilities. The plan should identify the savings required for the goals and establish the feasibility of the plan.
Review current asset allocation and portfolio
If you have an existing portfolio, review and rebalance according to your desired asset allocation between different asset classes – equity, debt, liquid, gold, alternative, international and real estate. “Asset allocation depends on your risk appetite and risk appetite. The portfolio should ensure adequate liquidity for emergency purposes and targets required to be met in the next one year,” Bansal said.
Review your life insurance and health insurance coverage
An important element of a financial plan is determining the life insurance and health cover required. The factors being considered are standard of living, lifestyle, goals, assets and liabilities. Premiums tend to increase as you age, so it is a good idea to start with life and health insurance at an early stage. Some other insurance like homeowner’s or renter’s insurance, travel insurance may apply to you in the coming year, so you can plan for them as well.
Be sure to pay attention to tax planning in advance
Mostly, we don’t bother about taxes till the end of the year, which can complicate the process for you, leaving more room for mistakes, Bansal said. “Therefore it is important to plan for taxes at the beginning of the financial year and take into account the eligible tax deductions,” Bansal said.