5 THINGS TO DO AS YOU START THE NEW FINANCIAL YEAR

The 1st of January ushers in the New Year with grandeur and celebration. Many people make personal resolutions to bring in changes that have been long overdue. Similarly, the Financial New Year, that starts on April 1st, works as a reminder of financial responsibilities and bookmarks our lives into yearly compartments. It is an opportunity to make changes that can have long-term financial benefits and inculcate financially healthy habits. With the new financial year nearly upon us, here are five things that you can do to start the year on a good note.

01: Create a financial plan

Managing your finances is the secret to living a financially independent and secured life. Your life goes through a lot of changes over the years. Hence, it is important to create and customize your financial plan based on the phases of your life. Think about your financial goals – are you planning to buy a house? Do you want to save for the higher education of your children? Are you planning to retire early and travel the world and need a big corpus ready? These goals can help you budget your costs and create an investment portfolio that helps you achieve your goals with ease.

02: Rebalance your investment portfolio

With inflation and rising prices corroding the value of money, it is important to invest in assets that can help you earn returns to help you reach your financial goals. There are different asset types to consider like equity stocks, bonds, mutual funds, gold, etc. Real Estate investments should also be considered since they have the potential to generate wealth over time. Also, investing in a commercial or residential property is an excellent hedge against inflation as property prices and rents increase with increasing inflation rates. Hence, while the value of your other investments might slide, real estate assets can offer inflation-beating returns if planned right.

03: Create a tax plan

Income tax rates can go up to 30 percent for income above a certain threshold. This revenue leakage can be stopped by making investments in tax-saving instruments. The Income Tax Department offers a list of investments that offer tax deductions and other benefits to people. Make sure that you go through this list and invest accordingly. If you have not yet purchased a house, then you might want to consider buying one as the government offers tax benefits on the installments paid on your home loan. You can also look at other investments that can help save tax and fulfill your financial dreams.

04: Understand the Union Budget and its implications

The Union Budget is announced in February every year. Most people tend to look at the salient features of the budget and don’t try to understand it in detail. Before the financial year begins, try to find time to go through the detailed Budget and understand its implications on your life and the overall economic situation of the country. This can help you make some informed investment decisions and earn more out of your investments. For example, in this Budget, the Finance Minister announced various measures to boost the real estate sector in the country with a special focus on affordable housing. This is expected to boost the real estate market and bring buyers to the table making it a good to consider investing in real estate.

05: Make financial resolutions

Most of us want to save and invest money but fail to reach our intended targets due to unexpected costs. Use the start of the new financial year as an opportunity to make financial resolutions that can help you achieve your goals. Create monthly budgets and try to save before you spend and not the other way round.

While the financial New Year holds a lot of relevance to businesses as they finalize their annual accounts and profits, it can also be a good time for individuals to take stock of their financial standing. Make sure that you start the new financial year on a positive note and get a grip on your finances.