Published On: Wed, Oct 10th, 2018

Perform These 5 Financial Moves Every Year to Zoom Ahead in Life

Just like the yearly maintenance of your home, regular health check-ups, and vehicle servicing, you need to actively manage your finances as well. Developing a system of smart financial moves can help you do that on a regular basis. Whether it includes smaller wins to save and make some extra cash or bigger picture moves to shift your financial future, the following five money moves will help you organise your finances for the next financial year and beyond.

 

  • Review Your Income and Spending

    Perform These X Financial Moves Every Year to Zoom Ahead in Life

 

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Everyone agrees on the benefits of daily exercising—but how many of us manage to follow it regularly? A personal budget is a lot like regular exercising- we know it is important, but very few of us follow it correctly. However, it’s vital to make a budget and review your spending and income every year to know if you are on track or not.

Once you do this, you will be surprised by how much you have spent, and how much you ‘Think’ you have spent. You may be spending more than you realise, which can hamper your wealth-building goal. Therefore, you need to assess your income, list your expenses and saving requirements and then make sure you cut back on your expenses to manage it within the available income.

 

  • Rebalance Your Investment Portfolio

Perform These X Financial Moves Every Year to Zoom Ahead in Life

 

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Setting and forgetting about your investments is not a good strategy, especially, if you want to stay adequately diversified. Your investments need a change with changing market conditions. For instance, when stocks fall or rise, the percentage of assets you have in stocks will fall or rise accordingly, which could put your portfolio out of balance. Similarly, if there are changes in your personal circumstances, you may need to reallocate your assets.


So, check your investment portfolio at least once a year to make sure you are still on target with your goals. While doing so, look at the following:

  • Your investments: Have ratings on your funds or stocks gone down?
  • Your investment concentration: Do you have too much invested in a particular company, industry, or sector?
  • Your asset allocation: Does it still match your risk tolerance?
  • Life changes: Have personal events changed your feelings about risk?
  • Reassess Your Insurance Needs

Perform These X Financial Moves Every Year to Zoom Ahead in Life

 

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Insurance needs are dynamic, and one can’t adopt the ‘forget it’ attitude when it comes to it. Therefore, it’s vital to reassess your insurance needs at least once a year. If not every year, look into your insurance needs post major events like buying a home, marriage, birth of a child, and so on. Because, when liabilities or responsibilities increase, there is a need for higher coverage.

A good health insurance, which would help you cover all big medical expenses, can be a great gift for your loved ones. Increase in critical illnesses in India and the rising treatment cost have made health insurance, especially critical illness insurance extremely important.

Also, having adequate term insurance can further strengthen the sense of financial security that you can provide your family. Term insurance will ideally replace the income that may be lost in your absence. While reassessing your insurance needs, make use of online calculators offered by insurers like Future Generali to determine how much you need and how much you must pay for it.

 

  • Invest for Yourself and Your Retirement

Perform These X Financial Moves Every Year to Zoom Ahead in Life

 

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Everyone has different goals to meet in the long run. Saving for your children and their future is fine but saving for your own future is important too. Investing to lead a financially secure and peaceful life after retirement should be your priority.

So, save and invest for your future and continue to do so every year, so that you don’t have to rely on your children to support you. There are various investment plans available today to help you achieve your retirement goals- like mutual funds, ULIPs, pension plans and so on.

 

  • Plan Your Taxes

Perform These X Financial Moves Every Year to Zoom Ahead in Life

 

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Most of us understand the importance of year-end tax planning. But in reality, tax planning should be round the year exercise. If you do so, all elements of your financial plan will work together in the most tax-efficient manner possible.

To begin with, calculate a realistic income figure for the next year and take the time to gather all your expenses. The closer your income figure calculation is to reality, the better you can manage your expenses, and ultimately your tax. Also, the selection of your investments must complement the tax deductions and filing status to create the best possible outcome.

In conclusion,

Every person has a unique financial situation that consists of different levels of income, savings rate, spending preferences, and so forth. However, performing the money moves mentioned above to better control your life and finances is a consistent opportunity for everyone.

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