ix things to put on your financial planning checklist for a New Year
As you welcome the new year, it helps to reflect on how you did in the past year. The past few years have driven the point that financial planning enables you to prepare for any outcome. Here is a checklist of six items you need to tick in your Financial Planning Process to Prepare for 2022.
- Prepare a Budget: Every year requires one to go through a new budget preparation exercise, considering the present realities. Among the first things that one needs to know is where they stand in terms of income and expenses. One of the best methods to save money and meet all your needs is to follow the rule of 50:30:20. According to this rule, one can utilize 50% of your income for necessities like food and accommodation. Further, one can use 30% of your income towards your lifestyle expenses like purchasing new apparel, buying new furniture or spending to eat out. The balance 20% of your income must be saved and invested mandatorily.
- Review Financial Goals: Reviewing your financial goals helps you stay on track with your long-term goals. Check if you are on track to meet your tax saving and retirement goals. Check if you have adequately provided for children’s education, marriage, holidays. While looking at your budget also look at your Goals of the past year. It will help in analyzing if any changes are to be done in your overall financial goals. One should also review the liquidity requirements and make appropriate provisions for it.
- Review your integrated investment portfolio: An integrated investment portfolio typically includes investment options like fixed deposits, Mutual funds, stocks, national pension schemes ( NPS ), Gold and Real Estate. Align your portfolio to desired asset allocation, keeping in mind the potential savings and investments you will be making in the next year.
- Debt repayment Goal: Have a plan to repay all your costly debts, like personal loans or credit card bills. Aim for a debt reduction target for the year, which you should realistically align with the sources of funds to help reduce these loans. Certain debts like home loans are low cost and offer tax benefits. So, in that case, you must plan your debt repayment goal in a way that you set all the higher cost ones first before you work towards settling the home loans. You should compare your loans and if required can get it restructured to optimize EMIs, taxability & affordability.
- Maximize Tax Savings: You may also start collating data for tax filing and plan for any tax-loss harvesting in the next three months before the end of the financial year. There are certain tax saving instruments which one should use to their advantage. This will not only help in saving taxes but also result in a forced saving.
- Review Your Family’s Insurance Coverage: You may or may not have comprehensive coverage on life, health, car and other risks. Reviewing this ensures that you are up-to-date on your risk coverage. If there is any change in your personal status, e.g., new job, new-born kid, marriage, etc., your risk cover requirements may change. The danger of the pandemic is still around and no one would like to be caught off guard. It is necessary to make sure that your family is adequately covered.
Conclusion :
Everyone has new year resolutions that usually inclined towards health.
In 2022 let us make a resolution to look after our finances also and that will help us secure our financial future. It is never too late to start and just a step in the right direction will help set the ball rolling. So wait no longer. We at Nivesh Ki Paathshala are always available to guide you, feel free to contact us.
We are grateful to have shared the journey of 2021 with you and for all your good wishes. Looking forward for your well wishes, blessings and support in the New Year.
Wishing you and your loved ones a very Happy and Prosperous 2022!