NEW DELHI: A disciplined approach can help you make the most of a new financial year, especially in terms of building long-term wealth. With prudent financial planning and lifestyle modifications, you can take charge of your expenses and your future goals and aspirations.
This piece can help guide you on how to organize your personal finances:
Write and review your financial goals
Writing down goals will help bring more clarity to financial priorities. Anup Bansal, chief investment officer at Scripbox, said, “With the financial year appraisal/bonus, your income stream increases, which could lead you to plan bigger goals. Reviewing your previous goals will set a direction for your goals for the new financial year. This step is also vital to verify if your current investments are optimal in terms of your goals.”
Create a balanced financial plan
After reviewing and establishing your goals, you can begin to establish a budget plan for the new financial year, analyzing your requirements, income, expenses, assets and liabilities. The plan must identify the savings necessary for the goals and establish the feasibility of the plan.
Review asset allocation and current portfolio
If you have an existing portfolio, review and rebalance based on your desired asset allocation across different asset classes: Equity, Debt, Liquid, Gold, Alternative, International, and Real Estate. “Asset allocation depends on your risk appetite and risk capacity. The portfolio must ensure adequate liquidity for emergency purposes and goals required to be met in the coming year,” said Bansal.
Check your life insurance and health insurance coverage
An important element of a financial plan is determining the life coverage and health coverage required. Factors taken into account are life stage, lifestyle, goals, assets and liabilities. Premiums go up as you get older, so it’s good to start early with life and health insurance. Some other insurance such as homeowners or renters insurance, travel insurance may be applicable for you in the coming year, so you can plan for those as well.
Ensuring focus on tax planning in advance
Bansal said that generally we don’t worry about taxes until the end of the year, which can complicate the process and leave more room for mistakes. “Therefore, it is important to consider tax planning at the beginning of the tax year and take into account eligible tax deductions,” Bansal said.