Our lifestyle is not static, it evolves over time. Our income is one of the main determinants and our aspirations further influence it.
March ending pressure kills the possibility of any celebrations of Fool’s day that falls on April 1. Most of us breath a sigh of relief as we go past April 1 saying – "Finally, March ending is here." In such a situation, who would celebrate the new financial year? Keep aside the celebrations of a new year, the beginning of a financial year warrants a re-look at your money matters. Here are 7 money moves you should make at this juncture.
Budget it right
Our lifestyle is not static, it evolves from time to time. Our income is one of the main determinants and our aspirations further influence it. But that does not mean that you should lose sight of savings. It must follow the ‘Earn-Save-Spend’ norm that should be followed by you.
Once you decide on your level of savings per month, you should curtail your spending. For that you should first know where you are spending. Write down your spending and identify patterns. This budgeting exercise should help you strike the right balance.
Initiate smart spending
Cutting down spending is not a welcome idea. Hence it is better to go for smart spending. Use apps, credit cards and loyalty programmes that help you pocket a few discounts on your needs. Also unsubscribe from all subscriptions that may induce spending on wants.
Try to cut your spending each month compared to previous month or the same month the previous year. If you compete with yourself there is a high possibility that you will emerge a smarter spender.
If you succeed with your spending goals, and if you get a good raise in your job, the savings simply leap in no time.
Beginning of the year is a good time to take stock of your loans. You can check the interest rates payable on them and the prepayment charges if any. Target high cost loans first, irrespective of the loan amount. Home loans come with tax benefits and lower interest rates compared to high cost personal loans. Hence even if a personal loan does ask for prepayment fees, do try to close them as soon as possible.
Such foreclosure of loans help you save money on account of interest you would have paid on the loan. If you study the real devils in your liabilities, you can attack them better.
Set your goals
Write down your aspirations in the form of financial goals. For example, you may want to buy a car priced at Rs 7 lakh three years from now. The financial goals must be expressed in money terms and must be time bound.
You should ideally be defining both your short term goals as well as long term goals.
Make a strategy
Setting your financial goals will also call for deciding on a game plan for achieving it. For short term goals, start saving money in less risky investment avenues such as fixed deposits, recurring deposits and bond funds.
If you are keen on saving for a long term financial goal such as retirement, do embrace risky investment options such as stocks as they are expected to beat inflation by a major margin in the long term. If you do not understand stock selection, opt for investing in equity mutual funds and balanced funds through systematic investment plan.
Plan your taxes
If you have avoided tax planning until the last moment of the past financial year, you better start your financial year with tax planning. Initiating your tax planning exercise in the light of your financial goals, will put you on the front foot. For example, if you have a long term goal of retirement, you can choose investment options such as tax-saving funds or Public Provident Fund (PPF) among others. If you have a medium term financial goal, then you can go for tax-saving bank fixed deposits.
Buying term life insurance and health insurance can be extremely helpful in the long term, as both of them protect you financially and bring in much needed tax breaks.
Kill that procrastination
If you think that these six points can improve your money matters, it is high time you act on them. Procrastination kills the best of the financial plans. If you start now, you will have more time as compared to a year from now. More time on hand not only makes it less pressurising, but lets you take corrective action wherever required.To put it straight, make a plan and start walking towards the goal of financial freedom.