Financial year resolutions- Business News

Financial year resolutions

Starting early is the mantra to overall financial well-being. Any compromise can only be at your own peril.

 Jinsy Mathew   
  • March 28, 2016  
  • |  
  • UPDATED   18:01 IST
Photo: Images Bazaar
Photo: Images Bazaar

It's that time of the year when an individual decides on financial resolutions. Resolutions may be meant to be broken, but when it comes to finance, certain decisions can have a make-or-break effect on one's monetary well-being. Below are some savings tips to fortify your long-term financial health:

Plan your tax

  • Tax is an inevitable obligation for every earning Indian individual, so start early with 80C investments
  • Rather than last-minute consultations with your financial advisor, initiate the process early and draw up a plan for the amount to be invested in order to reduce tax burden
  • For instruments such as PPF, which earn interest on your investment, the earlier you start, the better
  • When it comes to equity-linked products like ELSS or tax-saving mutual funds, an early start in the year means accumulating more units systematically through SIP

Get adequate insurance
  • To start with, do not consider insurance (life, health et al) as an investment product, but as a means of protection against unanticipated risks
  • Break free from a common Indian fallacy-buying insurance just to save tax
  • Sign up for a term insurance plan to cover life risk
  • If you have a plan, find out if the sum assured is enough to cover the family at current standard of living. If not, opt for an additional plan.
  • If you are only relying on office-provided health insurance, it is time to read the fine print (sub-limits, exclusions) of that policy and determine its adequacy
  • Ensure that the health insurance covers everyone who is financially dependent on you. If not, go for a new health cover.
  • The sooner you buy, the better it is, as there's a waiting period for existing or specified illnesses
Save more for retirement
  • The purchasing power of a present-day Rs 1,000 will be equivalent to Rs 760 thirty years from now assuming an inflation rate of seven per cent
  • Hence, say, a saving of Rs 1 crore for retirement may no longer be enough
  • Do not wait for your 40s to start planning for retirement. The earlier you start the better it will be, to avail the compounding power on your investments.
  • Invest in retirement products such as NPS, equity-oriented retirement funds for your sunset years

Buy a home you can afford
  • While out to purchase that dream home, do not overstretch pre-set budget
  • Even a bit of stretching can prove to be a financial blunder as you will have to make way for higher mortgage payments or EMI
  • Paying EMI should be no excuse to skip savings. Buy a home which meets your budget, not your fantasy.

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