FIVE MONEY MOVES YOU CAN MAKE THIS NEW YEAR

Every year brings the promise of new hope - to live life and to increase your financial strength so you can achieve your financial goals. While we plan for various expenses, exigencies and lower than expected income issues can mar those plans. One way to cushion oneself from this is to follow simple steps that we will share with you to ensure that you start 2019 with a clean slate and make well-informed financial decisions.

Year-End Financial Checklist

• Check your financial performance

Doing a periodic analysis of your assets and liabilities - your net worth is a good exercise to know how you have spent your money. Purchasing assets that will grow over time or even liabilities that will give some future cash flows will give a positive net worth. It will also give a reality check on your expenses and if you need to curb down on specific expenses.       

• Plan for the next financial year

This includes making a budget, planning for large known expenses, and also most importantly taking care of tax planning. Start working on tax planning before the New Year begins. This will avoid any last minute rushed investments like ULIPS and unnecessary insurance.

Apart from this, a small investment plan for the financial goals of the year can be created. There can be investments specifically by either redirecting a maturing investment or starting a new investment for this goal. Deciding the asset allocation for this specific goal is also important keeping in mind the time.

5 Money Moves to Make in 2019

1. Improve your credit score

Track your credit score by downloading free reports every quarter from various agencies. You can ensure to make all payments - especially credit card and EMI payments on time to avoid any credit scoring issues with these agencies. One should monitor the individual score from time to time to know the status. The report is available free of cost once every quarter.

2. Keep a track of your expenditure and savings

Making a suitable and appropriate budget is a great step towards ensuring expenses. Keep a buffer of 10-15% keeping in mind the historical trend for miscellaneous small expenses that crop up and have a way of derailing your budget. Savings should be a part of the expenditure and a certain fixed percentage deducted every month is the best way to save. The savings can be automatically redirected to an equity oriented mutual fund or liquid fund.

3. Widen your investment portfolio

Keep a lookout for new investment avenues. Most recently, cryptocurrencies became an interesting investment avenue though it ran into legal modalities. One should carefully look at the age bracket, earning capacity and responsibilities to determine the risk appetite. This way you can shortlist either equities, mutual funds or debt as per the investment period and the risk . One should keep an open mind toward different types of investments. Even P2P lending these days is a new viable method of earning more from your existing money. It does carry few risks so it’s advisable to be do your  proper research for any kind of investment.

4. Aim to increase your finances

Money can either be earned more by different avenues or the same money can be multiplied. Earning through various avenues can be taking freelancing tasks over weekends and free time or  taking into multi-level marketing channels to exploit the skill of selling.

Other ways to make your money grow is to learn more about investing. Or more easily, one might hire a financial planner who can help you plan your finance, help stick to a budget and also give various avenues where you can multiply money keeping into account various changes in the economy. Doing all this requires considerable time and energy and financial planners are well-equipped to do all this.

5. Start building an emergency fund

An emergency fund is the simplest of ways to form a “piggy bank” of the unknowns. While it might not be necessary if a specific fixed portion is already going into savings, it will help to have an amount ready for medical issues, emergency expenses like breakage of important objects (like a mobile phone). Emergency funds can help reduce the pressure on asset which help in building savings . These savings can be directed for the creation of an asset such as a home or future education expenses.

Overall, planning for finances is walking a tight-rope walk between extravagance and cutting necessities. One can easily be on top of things by knowing how much is already spent, how much can be saved and how much can be used towards “wants”. Careful recording and analyzing of expenses will always help the most even in times of a downturn.