Planning Finances for 2020
Many people make resolutions for the New Year. But making resolutions can never help you until you are determined and stick to it. Most of the resolutions people make are related to improving themselves in the coming days. However, resolutions are not restricted to any specific field and can be related to one’s personal, professional or financial life. In this article, we will be discussing your financial habits that can help you to improve your financial health in 2020.
But the fact is any improvement doesn’t happen overnight and it’s important to set financial goals in terms to achieve them. Financial plan with long term goals helps you to achieve your long-term goals, but we will suggest you start with short-term goals in the beginning. Like while planning your finances for 2020, start with a target for January, try to achieve that, and then move ahead with a plan for Feb and March. Taking baby steps will always protect you from major failures and on the same hand achieving the first goal will motivate you for your next target.
Financial planning can vary from individual to individual, and a financial adviser can help you with it in case of a full-proof plan for your investments and tax savings. Once you start following your plan strictly, your financial health will be on the right track.
Remember, your financial planning helps you to make the best financial choices and set a better financial life for you.
Reviewing What You Spent in 2019
- Analyzing how much you spent each month?
- Analyzing your expenditures on necessities, and your wants.
- Which expenditures were unnecessary?
- Where you overspend?
- Where you were supposed to spend but you didn’t?
- Analyzing last year’s investment and approximate return from them.
Set Short Term & Flexible Goals
Short term goals are more likely to get accomplished as compared to that of a long term goal. You just have to be clear about your goals and should have a proper plan to accomplish them in a pre-set time frame. But you don’t need to be too hard on yourself to accomplish them, and that’s the reason we are suggesting you set a flexible goal. One year is a long time to make progress toward your financial goals. Hence your planning can be targeted for a month or two, seeing the success of the first plan, onwards plan can be made.
Spend to Save
Whether you are self-employed or a salaried individual, you should try spending some to save from your taxable amount.
As per our income tax act, one can save up to ₹1.5 lakh from their taxable income. But to avail this exemption you need to invest your money under some particular categories which include FD’s PPF, savings schemes under post office and so on. Doing this not only saves some from your taxes but also gives you a return in the future. So, make your strategy clear that you won’t regret it in the future.
Organize Your Debts
This should be on your top priority while planning your finances anytime. We as a whole realize that we’re in an ideal situation without realizing the seriousness of debt. Debts are financial obligation which can cause stress and tension when not managed properly. So, while planning your finances for the coming year you have to be extra careful. Try to repay your higher interest debt as early as possible as a higher interest consumes a lot of money. If not this be shorted with your preferences, like which debt is on priority to be cleared first.
For example- You are planning your finances for 2020, and you have a credit card, a car loan, a personal loan, and a home loan too. In this case, you need to be clear about your priorities. In the ideal situation, your preference should be to clear your personal loans first, as it has a higher interest rate, then comes the car loan and at last home loan. In case any of you have a credit card debt, then that should be on top of all to be cleared. This is because credit cards have a very high-interest rate and it can be a never-ending process when not managed properly.
Save for the Future
After you have done with all the above-mentioned things, you should move in the direction of building your retirement and contributing investment funds. There are numerous money related guides available online, try to go through them and understand the importance of savings. It is always suggested to place 15 percent of your gross pay into retirement every year. In any case, on the off chance that you have explicit retirement objectives, you may need to expand this sum.
In case you are not sure about any investment or have any money related issue then contact experts for the help.
There’s a lot you can do to improve your financial health in one year. Take one step at a time.
Remember you can’t do everything perfectly at once. Don’t lose hope as there is always a light at the end of the tunnel, and consistent efforts always are guaranteed to bring results sooner or later.