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5 personal finance pointers for new financial year

This is the time in a year when most people relax after a very hectic financial year. While there would be some who would be finding ways and avenues to invest to save tax, there are many who don’t want to repeat the last minute saving act, which they resorted to last year. These are the ones who intend to follow a systematic path in investing to save tax and make the most of their monies. For these, here are five things you should bear in mind when it comes to while dealing with your finance efficiently:


Budget:
All companies plan their financial year well in advance. Nowadays many companies ask their employees to contribute to this budgeting exercise by asking the employees in various functions – operations, sales, marketing, customer services, administration and also human resources, to come forth with their ‘key result areas’. The very idea behind such budget is to try to increase the probability of success for the company. Something similar you can plan for yourself. The more you know about your spending and your income, the better you can plan your expenditures and increase your savings. Considering this as a new beginning from now you could have a full charge of your expenditure and savings balance sheet.


Taxes:
Tax is an inevitable obligation for most conscientious working people. Most worry about their investments to save tax in the last week of the financial year. This year you can change the situation if you act now. If you are an employee, your employers will ask you to submit your investment declaration by the end of May. Take it as an opportunity and initiate the process of tax planning right now. You may approach a financial planner and get a holistic financial plan for yourself, which also includes your tax planning.


Investments:
Many of us believe in ‘do it yourself’ mantra, but very few act upon it. This financial year, it is the time to embrace -'Think-Act' – model. If you buy into an idea, you should subscribe to it. If you know that you have to invest to save taxes, and you believe in India growth story, why not start investing in Indian equities. You can also look at buying into Equity Linked Saving Scheme (ELSS). You can start a systematic investment plan (SIP) in ELSS now, when Indian equities are trading at economical prices in comparison with their performances in the last few years. In the last three years ELSS schemes have given 1.58%. It is probably the best time to invest in stocks, when there are not many keen to buy them. An SIP can help you minimise your timing risk. You can start investing Rs 8500 each month and by the end of the year you will exhaust Rs 1 lakh limit under the section 80 C of the Income Tax Act. You will save taxes and also invest in high growth assets. If you already have an Employee Provident Fund (EPF) or other tax saving investments in place, you may reduce your SIP amount accordingly.


Liabilities: 
It is a good idea to know what you owe. Know the outstanding loans on your name. Check your CIBIL score. Carefully read through your credit report. If there are any discrepancies in your credit report then better take it up with the credit bureau. If you have too many unsecured loans – credit cards and personal loans, chalk out a plan to close them at the earliest. If you are in too much debt approach a financial planner to get your debt restructuring done. Most of us get yearly bonus in April. You should use it to bring down your loan liabilities by prepaying your loans. If you pay your loans on time, your credit score improves and you become a more creditworthy person for banks. This year you can achieve this financial goal of becoming a financial sound person if you start working on your liabilities early.


Peace:
Many times we forget the more important thing in life—peace of mind. We try to buy happiness at any cost, and in that process end up losing peace of mind. This financial year you should put your peace of mind as a priority. Spend some time identifying a good term life insurance policy and a health insurance policy. Buy one each with right sum assured. Instead of cursing your bank for not cutting down interest rates on your home loan, try to figure out which other banks are offering competitive interest rates. Identify a good deal and opt for a balance transfer. You can also get in touch with a good financial planner to put in a place all these things for you. Though she may charge you some fees, but it will be less significant in comparison with your peace of mind.

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