Being rich and prosperous is everyone’s dream. All of us have dreams of achieving big things, earning a lot of money, and accomplishing our goals. But how often do we stick to our goals? Patience, hard work, and planning are important aspects of venturing into anything in life.
As the new financial year begins, we should all be prepared and make the most out of what we earn. Let’s look at some financial rules you should follow this financial year to get closer to your goals.
- Review Your Finances
Financially savvy people keep a tab of their expenses, and where all the money is going. If this question produces a blank space in your mind instead of a slew of spends, perhaps it’s time you start a spreadsheet to track your money. Prepare a list of small and big expenses. You should list all the necessary payments, such as rent, EMIs, school fees etc., and take other bigexpenses into account such as vacations, household shopping, etc. Once you know where your money goes,you canplan your expenses better without compromising on your saving goals.
Also,ensure that you are not touching your emergency funds to meet your current needs. You must upgrade the emergency fund as and when your income or expense increases. Don’t forget to replenish the fund if you had to use it for some reason.
- Take Responsibility
After you’ve assessed your expenses, you should take responsibility and further divide your expenses. Analyse your expenses to find out which are the ones you can cut down on. For example, if you’ve been eating out too much, try to limit your outings and bring that number down. Plan your outings in a way that reduces expenditure while keeping the enjoyment high enough. This will benefit you immensely in saving a considerable portion of your income. Set your savings target for the year. No matter what’s the number in your mind, cutting down or avoiding unnecessary expenses will help you achieve your target.
- The Golden Division Rule
You should be dividing your income into 50:30:20. 50% of your income should go towards paying bills and household expenses, 30% should go into investments like mutual funds, life and health insurance plans, and other such options. 20% of your income should be spent on leisure activities like eating out and watching movies. If you manage to divide your earnings like this, you’re on the right track.
- Analyse your investments
You should also look at your investments and analyse if you have a balanced investment portfolio. Ideally, you can put more money into equity through different instruments when you are young and less as you grow older. You must get yourself medical insuranceas it’d guard your savingsagainst any unforeseen illnesses. Your family’s health must be one of the top priorities,and you should aim to avail the best health insurance in India to guard your health and your finances.Health and life insurance also provide tax benefits to you,and like other investment instruments, these can be paid in instalments too.
You may consult a financial advisor or do some research yourself and decide which are the best investment instruments for your requirements and diversify your investments for best possible returns.
- Go Cashless
There are several benefits of going cashless, including not having to search for change for high denomination notes. Using cards and e-wallets to make payments allows you to keep a record of all your spending. Moreover, many payment apps and e-wallets offer various incentives in the form of cash-backs and discounts, which can work in your favour. Also, you get freedom from carrying a lot of cash around.
Start of financial year brings an opportunity to make it financially better than the previous one. One of the major objectives in a financial year is to reduce your income tax liability. Life and health insurance plans help you reduce your tax incident along with offering protection from sudden expenses and emergencies. Along with insurance, you can also invest your money towards financial goals like retirement to increase your tax savings. Thus, protect your family and improve your financial health this financial year.