This is what you should do in the new financial year!
We are now in April. The new financial year has begun. And this is therefore the best time to start planning your finances.
Today, I’m going to write about what you can do to manage your money better. Whether you already plan your finances or not, here are a few things you should do in order to build your wealth:
Insurance: Start with this. Period. Do not start investing until you have a life insurance for yourself and a health insurance for yourself and your parents. If you’re a corporate employee, even if you have an insurance provided by your company, make sure you have your own policy as well, because you don’t know whether your next employer will have this provision or not. If you need help with buying the right life insurance or health insurance policy, feel free to reach out to our team HERE. We’ll give you unbiased advice on which is the right insurance policy for you, and help you get the right one :)
Emergency Fund: If you don’t have at least 6-months worth of expenses in a savings account or a liquid fund, start building that first. We are living in an extremely uncertain time, and a job loss could mean real hardship. So make sure you have enough to sustain for at least 6 months. This could be in a savings account, liquid fund or a fixed deposit. The idea is that you should easily be able to withdraw it when you need to.
Budget: Just take out your last year’s bank statement and see how much you’ve spent in the whole month on an average. Or even better, you could use an app like Walnut and see where you’ve spent your money (No, this is not a paid promotion). They’ll categorize it under different heads - Food, Travel, Shopping, Ecommerce etc. Now, see where you’re spending the most, and the next time you spend money there, you’ll automatically think twice. Try and cut down unnecessary expenses
Tax: Very important. Plan your taxes for this year in advance. Make sure you declare all investments, insurance policies etc. to your employer. If you don’t have them yet, plan to get them so that you can claim tax deductions well. If you need help with planning, use our platform and get an auto-generated tax plan in 3 minutes.
Restructure your salary if possible: Ask your employer if they can restructure your salary to increase tax exemptions, therefore reducing your Income Tax liability and giving you a higher in-hand salary. The net outflow to the employer is the same, but they can include more exempt components to reduce your tax liability and give you a higher in-hand salary.
If you travel a lot, ask them to increase LTA. If you stay on rent, ask them to increase your HRA. If you eat out, ask them to give you food allowance. And if your employer is happy to change your salary structure, reach out to me here and I can help you figure out the best ways to do this. (But please check with your employer if they’re willing to do this before reaching out, as we’re running a startup where we’re swamped with a lot of things anyway 🙂)
Start an SIP: If you haven’t done this already, make sure you start an SIP right away. You can start an SIP in a tax saver fund, which will help you save tax as well as grow money. Put aside 50% of your increment money to start an SIP, and see it grow over the next 5-7 years!
That’s it guys. While there are a lot of things you can do to manage money better, these are the basics you can start with. I’m sure this financial year is going to be wealthier and financially more prudent for you.
All the best!
PS: Do subscribe to this newsletter if you’re not reading this on email, and share it so that we can help more people get financially savvy!