What is common between End of December and April 1st? Very Simple! It’s the starting of New Year either Calendar Year or Financial Year. So what we all do at the starting of New Year. We Take Resolutions. Is it not.
Resolution is typically to improve ourselves, promise to leave either bad habits or promise to start a Good one. So you all agree with this or not? But we all make resolutions on January 1st; we really do not take resolutions on April 1st. Should we not really think to make New Financial Year a better year than the last year? Yes…. A new financial year waits for all of us and now the challenge is to make this year better than the last one in terms of Financial Health.
Confused? You must be thinking can manage personal finance be healthy? Or let us put it this way that is there something “unhealthy finances”. Yes! People have Unhealthy Financial Habits and there is plenty of it. But before we explain, can we ask something:
- Did you miss any payment deadlines of your say electricity, mobile or a credit card and pay extra charges?
- Did you deposit cash in another bank account as you had given a cheque from another bank account by mistake?
- Did you miss the tax proof submission date of your organization and then when you missed you thought “you are an honest Indian, as you are paying the tax?”
- Did you purchase the LCD from your salary and told the wife to manage the household from her petty savings?
10 Best Tips for Managing Personal Finance
The questions can be as many but all these refer to what we call being “Financially Unhealthy”. So, here we are going to suggest to you the how-to manage personal finance this year:
1. Analyze your financial relationships
Why do you have multiple financial relationships for similar products? Close the bank accounts that you do not need. Transfer the stocks in one Demat and close the non-required ones. Discard multiple credit cards to make life easier.
Must Check – What is an Emergency Fund & how to create it?
2. Use the Envelope System
Set up an “envelope system” to help you track where your money goes. Label each envelope with a specific spending category such as housing, food, transportation, clothing, entertainment, personal care, etc. At the beginning of each month, put the money have budgeted into the appropriate envelopes. When payments are due, withdraw from the envelope.
3. Buy the appropriate life insurance
Peace of mind is the first thing in Financial Life. Buy appropriate insurance. Take the help of a Financial Planner to calculate your retirement. Also if you have investment-linked insurance, find out whether would it be better to exit from it, make it paid up or surrender it.
4. Buy Health Insurance
This would save you and your near ones from the Hospital blues. We suggest that along with your wife and kid, buy Health Insurance for your again parents also and save your income-tax as well. We think this is one of the best ways to tell parents that we care.
5. Start saving and make sure your savings are equal to investments
If you are in your twenties open a Systematic Investment Plan (SIP) with a mutual fund and open a PPF account. If you are in your thirties, Start a SIP for Retirement Planning. All these schemes have different features and tax benefits/ implications. Consult Financial Planner before investing.
6. Retire Expensive Debt
Debt is part of life, but you need to manage it. Always retire the expensive debt whenever you have spare money. Even don’t mind taking a loan with less interest to pay off the loan with higher interest.
7. Start using Technology
Get registered for E-Statements and E- payment. Use auto- debit systems either through bank account directly or through credit card. Let utility bills be paid online.
8. Keep a record
This year keep all records in proper form. Scan all important documents for eg your insurance policies, tax certificates, etc. File all your investments with income-tax benefits in a separate file and others in separate files.
Must Check – Are You Holding Too Much Cash
9. Control Spending habits
This year promise that you won’t deviate from your Budget. No matter how much or how little you’re paid, you’ll never get ahead if you spend more than you earn. Often it’s easier to spend less than it is to earn more and little cost-cutting effort in a number of areas can result in big savings. It doesn’t always have to involve making big sacrifices.
10. Don’t shy from seeking help from expert
A Financial Planner can act as a personal (financial) fitness trainer. Don’t feel shy to ask questions about your financial needs and solving the financial agony.
In the end……let us pray that all our readers remain Financially Healthy and Prosper in this New Year.
Now you know managing personal finance? would you like to share your Financial Resolution? Add them to the comments.