Ways to create a brilliant New Year financial plan

Here are some tips to help you create a financial plan that works

Ways to create a brilliant New Year financial plan

We ring in the New Year with great optimism in anticipation of improving upon the previous one. Taking charge of one’s finances ranks very high on the list of priorities for all of us. Daunting as it may sound, all it takes is a little foresight, time, and discipline to get a rock-solid financial plan in place.

Here are six tips for a financially rocking year:

1. Draw up a plan

Putting your plans on paper is imperative for any financial goal to work. So sit down with a big cup or mug of your favourite beverage and draw up a comprehensive goal sheet. 

Account for all your income sources and expenses, investment patterns, and debt obligations. Prioritise your short-, mid- and long-term goals and define timelines for when and how you plan to achieve them.

Related: Financial planning for dummies: A 7 step guide 

2. Create a living, breathing budget

The financial plan should be a dynamic document that you revisit regularly. It needs to adapt to your (possibly) changing goals, or important life events such as marriage, the birth of a child, or even a medical emergency. 

As important it is to look forward, one also needs to look back to assess areas of improvement. Feed in your actionables on your smartphone and email calendar so that you are reminded to evaluate your goal sheet once a fortnight.

Related: The best apps to help you track and save money 

3. Make sustainable changes

You don’t have let go of all your desires to fulfil a financial goal. The idea of the exercise is to be able to achieve financial freedom. So start with small practical and measurable goals. These small milestones not only make the effort look less challenging, they also act as encouragement for the next landmark.

Track progress regularly to ensure all inflows and expenses are managed adequately and incorporate corrective measures if necessary.

Another important aspect is to separate your wants from your needs. This should help weed out or curb wasteful expenditure and allow for better fund allocation. And if you have a significant other, sibling, or parent who shares a similar financial goal, partner with them to create a robust roadmap. It will also work as a check for each other.

Related: 5 tips to strengthen your financial plan 

4. Consolidate debt

If you have any debt, mortgage or credit card dues piling up, it makes sense to get them all in one place, preferably at the cheapest cost option, for easier management and to avoid paying a heavy interest penalty. Automate and prioritise debt repayment over other aspects, as the interest burden can have a long-lasting effect on your financial health.

Once a year, you are eligible for a free credit report from any of the credit rating agencies. A good credit score determines the eligibility and cost of any loan you may need in the future. Use this opportunity to see what actions are hurting your credit scores and take remedial measures to correct them. 

Related: How to be on the right side of debt 

5. Optimise your tax outflow

Deferring tax planning until the last moment can cost you dearly. This year, take a proactive approach and understand all your tax obligations. Start planning for FY 2019-20 from April.

This way you do not have to worry about the financial strain of making lump sum tax saving investments at the end of the financial year. Additionally, this enables monthly savings to grow with compounding.

Make the most of all deductions and exemptions that the tax authority provides – from investing in insurance and retirement planning schemes to rebates on mortgages and expense accounting.

The tax laws encourage good financial habits as well. Not only can you save thousands (if not lakhs) on income tax every year; there are some great tax-saving investment products that can give your portfolio the boost it needs.

Related: Tax planning tips for every age group 

6. Invest wisely

Ensure that the money you work so hard for does the same for you. Based on the financial plan you have drawn up, and your saving goals, debt, and tax obligations, you need to strategise an investment plan that fuels your financial freedom. 

Assess investment products based on your life goals and risk appetite. Start with small, regular investments. There are plenty of apps available that allow one to completely automate the process and make monitoring just as easy.

Related: Novice or expert, there’s an investment strategy for you 

A financial plan is a roadmap to your future; how you tread the path decides how the journey pans out. Take small, well-paced steps and enjoy the journey. Trust us; the view from the top is something to behold!


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