The new year is around the corner and if you’re planning on having a better year with your finances, then now is the time to start planning. Though the new financial year is still a few months away, no good habit needs to wait for a deadline (that could be one of your new year resolutions)!
Planning ahead is the key to staying on the right track. The key to financial security and happiness in your present and future lies in taking what you’ve learnt from the last year and applying it to the new one.
Set financial goals
Always start planning with a financial goal in mind. Ask yourself questions like, what do I want to gain this year? And how can I get there? Once you have answered these basic questions, you are ready to create a plan for the fiscal year.
Set a budget
Out of your yearly budget, keep a substantial amount for both savings and expenses. David Ramsey, renowned author and financial expert, once said ‘A budget is telling your money where to go instead of wondering where it went’.
Plan your tax deductions
Under Section 80 of the Income Tax Act a person is eligible for various tax deductions. Currently you get tax deductions on investments like mutual fund, health insurance, children’s education, donations, etc. Look for some investments in avenues that are eligible for deductions as you can save you up to Rs.1,50,000 in taxes.
Make sure you do this proactively in advance, at the start of the financial year, instead of rushing at the last minute. While you are at it, pay some advance EMIs on home loans as those are also eligible for tax deductions.
Plan investments and diversify portfolio
Now that you are aware of different tax benefits you can now plan your investments carefully. It is ideal to invest in different avenues and diversify for a strong portfolio.
A strong portfolio will give you strong financial backings and keep your current finances in check. A good idea would be to look beyond the obvious and consider options beyond what you’ve stuck to so far, to increase returns. Separate all your short term and long term investment options and prioritize them by aligning them to your financial goals to get the best out of your money.
For any short-term goals that you may have, consider investing in a versatile financial tool like KyePot’s digital chits. You’ll get the benefit of building a saving while getting disciplined about your savings, get access to a larger sum of money to achieve your financial goals, and healthier monthly earnings than your traditional bank products.
Plan insurance coverage
Life insurance is an important security for the future. We pay and renew insurance on car, house and health but what about securing your and your family’s long term future? The younger you are, the cheaper it’ll be for you to get a good cover.
In conclusion, setting a plan for the financial year is not on our first list of considerations since we are always under the burden of taxes and other investments. Think differently this year, plan your way ahead and focus more on income generation than expenses.