Many of you might perceive that the end of the year can help you to get your finances back on track. While the year-end can help you to revise your current financial year, the new financial year can allow you to maximize your wealth. With the new financial year around the corner, you might aim to claim tax deductions, enhance your current gains, and reduce your tax liability.
Over the past few years, you might have ensured that your financial plan can help you to grow your funds. You might’ve dabbled in various types of investments. However, you might have been lacking behind to reach your financial goal. Therefore, you should review your financial plan once in a year to ensure that you meet your life goals. Let’s go through the top five moves you can make before the financial year comes to an end:
- Consider your financial goals
If you already drafted a plan, you should determine your financial goals and set a plan of action to meet those life goals. Your financial goals can be classified into two categories:
- Short-term goals: Purchasing a new house or a dream car
- Long-term goals: Your child’s higher education or dream wedding, your retirement, etc.
While short-term goals can be achieved after a specific duration, your long-term goals can be met after years of accumulating money. Therefore, you should prioritise your goals beforehand to ensure you reach them faster. All you can do is block a few hours every day to review the status of your goals and ensure smart financial planning.
- Diversify your investment portfolio
Gone are the days when you should fear investing due to the involvement of market risks. Today, there are investment tools in the market that can allow you to diversify your investment portfolio. A Unit Linked Insurance Plan (ULIP) can let you diversify your investment portfolio to secure your invested capital from market volatility.
When you are young, you can choose to invest in equity funds since you might have fewer financial responsibilities. On selecting equity funds, there can be higher chances of achieving a relatively high return on investment at a young age. However, you should opt for debt funds as you grow older when you have more financial responsibilities of your spouse and children.
- Revise your budget plan
Having a budget can be essential as it can help you maintain your financial discipline as well as track your expenses regularly. Therefore, it can be imperative to draft a budget after you receive your first paycheck. In case you already have a budget, you should review it every once in a while before the year ends.
Reviewing your budget can help you keep a tab on your spending habits as well as prioritise your goals. While reviewing your budget, you can ask yourself basic questions such as:
- Do you spend on irrelevant items?
- Do you stick to your budget plan?
- Are you saving enough after spending on your routine expenses?
- Clear your past liabilities
As a young adult, you might have had dreams and goals that you wish to achieve at the early stage of your life. However, you might borrow loans from the market if you inadequate funds to meet your dreams. For instance, you might take a student loan for higher education, business loan to start a new business venture, or travel loan to explore exotic destinations.
Although debts can help to fulfil your goals, it can act as an additional financial burden. Therefore, if you have past debt, you should clear it before the beginning of the new financial year. Paying your past liabilities can allow you to lead a stress-free life without worrying about the payment of your debts in the future.
- Buy sufficient coverage
Your lifestyle needs can be dynamic. Since your needs can vary at every stage of your life, you should buy adequate coverage to financially protect you from uncertainties at every life stage. If you have a term insurance plan, you should review it before the year-end to ensure that it matches your evolving needs.
The intensity of the changes can vary from starting a new family to buying a new house. Therefore, you should increase or decrease your coverage based on the magnitude of the changes. If you have an insurance plan that is going to expire soon, you should either revive it or change it completely depending on your financial requirement.
To conclude, get your finances together by following these top five moves before the current financial years to an end. With only a few days in your hands, you can double your efforts to maximize your money before you enter the new financial year. The financial measures that you take today can impact you in the long run, as well as ensure your financial sustenance.
