As we embark on the new financial year, we need to take money matters in hand in order to ensure that we make the right moves throughout the year. Investment decisions taken at the end of March simply for the purpose of tax saving will not lead us anywhere. If we start early, we start right and end up investing in the right avenues. Here are seven steps you need to take for a successful financial year.
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Budget: Our income is the main determinant of our lifestyle. But this does not mean you lose sight of savings. Create a monthly budget and stick to it. Once you decide the level of savings per month, you should try to curtail your spending and increase the amount you save. Firstly, you need to identify the areas where you spend and write it down. Next, you should try to reduce the spending and increase your saving with each passing month to strike the right balance.
Smart Spending: Cutting down on expenses is easier said than done. Hence, you should begin with smart spending. Use loyalty programs, credit cards and apps that will allow you to make the most of the discounts and cashback offers. You can also try to cut down on your expenses here and increase your savings.
Take stock of debt: Right at the beginning of the year, you need to take stock of all your loans. Check the interest rate applicable on it and the prepayment charges if any. Try and repay high-cost loans first and close them as soon as possible. Irrespective of the loan amount, repay the loans which have a higher rate of interest. It will help you save money on account of interest you would have paid on it.
Write down your goals: Write down all your financial goals in terms of money and time. You should be able to identify the goals as long term and short term, now write it down and set out the time frame within which you want to achieve it.
Strategize: After you have set aside the financial goals, you need to build a strategy on achieving them. You can start saving money for short term goals through fixed deposits and bond funds. If you want to save for long term goals, you need to embrace risky investment options like stocks and mutual funds through a systematic investment plan.
Plan the taxes: Never avoid tax planning until the last moment. It is better to start the financial year with tax planning in order to make the right decisions. Keep your financial goals at the forefront and initiate the tax planning exercise. Depending on your financial goals, you can choose investment options for the short term and the long term.
Do it now: Lastly, do not delay important financial decisions. It is high time you act on them. If you start now, you will have more time as compared to a year from now. It will ensure that you take well informed decisions and corrective action wherever required.
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Make a plan today and start working towards it in order to achieve your financial goals.