The New Year brings with it new hopes, new aspirations, new habits, and also new goals. But are these only limited to personal and career accomplishments? One of the major goals to achieve every New Year is probably the financial goal.
It is because unforeseen expenditures are a part and parcel of one’s life, even though it is quite difficult to admit it. However, you can always be prepared if not avoid it. One of the smart ways of managing your finances is always being prepared for it one step ahead so that you can enjoy the fruit of your financial planning.
At Digilekha Consultancy, one of the premier Tax Firms in Pune we give you some insights on the same.
Set a budget plan-
Having an idea of your budget and sticking to it is the first and foremost step in deciding the financial goal for 2022. Creating a budget helps you identify your needs and wants and set priorities. It also helps you make mindful decisions about adjusting your finances and setting them in order. E.g. the typical goals are, saving for a new home, repairing or remodeling your house, foreign tour, school/college expenses of children, planning for a family, or in an unfortunate circumstance paying for an illness.
Determining the duration of your goals-
Another important step in planning for the coming year is to understand the duration of your goals. They can typically be-
Short-term– 6 months to a year.
Midterm– up to 5 or 10 years
Long-term– up to 15 or more years
Make your goals, SMART-
You need to be practical about your financial goal list. In that case, you need to be-
S- Specific with your goals. You cannot have a vague picture in your mind regarding your goals. You need to be clear in your approach about the same.
M- Manageable. If your goals involve taking certain kinds of risks, then you should be calculative about it. A calculated risk will always pay off in the long run.
You should be fairly confident enough to attain your goals. If you have an attitude of ‘let’s see how it can be done, then you are probably swimming in dangerous waters.
R- Your financial goals need to be relevant, according to your priorities.
T- Your goals should have a fixed time limit.
Creating an emergency fund-
As a sound and informed investor, you need to be aware that financial emergencies can crop up at any time. You need to have a corpus emergency fund separately irrespective of the yearly financial goals. This way your financial targets will remain intact and will not add up to additional debt.
Make the best use of your disposable income-
After paying up for the taxes, disposable income is what remains with you. Here you need to be smart about calculating the same. Various Tax and Accounting Services Firms vouch for the same. You need to invest in such a manner as to how it will add up to your wealth. There are several ways of increasing your disposable incomes, typically those are, doing a second part-time job, starting a business from home, spending less on luxuries, investing in real estate, stocks, and bonds.
Pay off that debt-
Accumulation of debt is the biggest reason for being a dampener for achieving your financial goals. And this is most commonly credit card debt. Most of the people carry a credit card debt from month to month and this effect can be significantly being reduced by-
- Improving your credit card score.
- Lowering the amount of interest, you pay.
A good credit score is important in many ways. It helps you get better rates on mortgages, loans and is overall a booster for your financial health.
Monitor your progress-
The goals which you had set at the beginning of the year, are you on the track to achieve them? Are you able to successfully plan a streamlined financial approach? Monitoring your progress now and then is extremely crucial as a haphazard approach can come crashing down like a mountain, making things difficult for you.
Equip yourself with financial literacy-
What better than the occasion of the New Year to equip yourself with financial literacy to understand the nuances of personal finance. There are several books available in the market, to guide and assist you. If you are keen on understanding personal finance, then you can take the help of a professional to understand in-depth the details of the same.
Do you want to make your finances healthy this 2022? Contact Digilekha Consultancy, one of the Best Tax Consultants in Baner, Pune.