A financial year planner for a common man
New financial year is not very far now. Hence, it is time to pull your socks up to get ready for it. However, the calendar year has started in January itself; April is the first month as far as our finances are concerned. Salaried persons are set to get increments from April onwards. The calculation of tax liabilities also starts from the month of April. As union budget and rail budget have already been announced, expenses are set to change going forward. As inflation has persisted around the higher levels, it also demands a review of the household budget. All these things collectively require a fresh plan for the year to come- financial year 2013-14.
This planner would not only help in the year to come, but also inculcate a long-term thinking in you as far as finances are concerned. This would not only help in understanding the future requirements but also suggest ways to meet them all.
April: time to make budget
Failing to plan is planning to fail, they say. The financial year planner starts from the month of April itself. In April, you should make a proper monthly budget looking at the changes in income and expense patterns. The monthly budget would include probable income and probable expenses for the month. This budget would tell you the limits within which the spending has to be done. Making a budget would restrict the frivolous demands and help in using resources wisely.
Accordingly, a tentative budget for the whole year should be made in the month of April only. The would include the expected income and expected expenses for the year. Actually this would give a clear idea as how much amount you would be saving in the current financial year.
Once this is done, you should try hard to stick on it. This would not only keep the things on track, but also help you in avoiding in any debt trap.
There are two other things to be done in the month of April only. You should make a proper plan to pay off the high interest debts (for instance, credit card bill), if there are any. This payment can be done in months to come, if the amount is heavy. Another thing, which is of utmost importance, be done in April is a proper tax planning for the current financial year. As you know the probable of the year, it would help you in understanding the probable tax liability. Financial planners that you should make full use of tax saving instruments looking at your liabilities and start investments accordingly from the very start of the financial year.
June: time to review insurance
It is time to enjoy summer vacations for children as they pass another year of school/ college. But for the guardian of the family, it is time to review the insurance needs of the family as responsibilities have increased a bit more in comparison to last June. First of all, you should look whether the sum assured of you life insurance policies is adequate or not looking at the financial needs of the family in future. If the answer is no, you should buy another term plan for remaining amount (of sum assured). Another thing to look at in June is whether all members of the family are under the coverage of health insurance or not. Another health insurance plan can be bought if required. Remember, all these expenses towards buying insurance can be used for tax saving under various sections of income tax act 1961.
August: celebrate the financial freedom
Now we are heading towards the independence day of our country. It is time to teach the children about financial freedom. As the education of day-to-day financial management is not a part of any school curriculum, you should teach them taking financial decisions. They should be taught the importance of financial responsibility. You should open a bank account in the name of the children to let him learn the basics of financial world. This small step would not only be the start of financial literacy for the child, but would also lead to a greater financial responsibility, which would be of great help for him/her in future.
October: time to invest in gold
Now it is time of festivals and celebrations. Sellers would be providing a number of offers and goodies on buying of automobiles, electrical appliances and electronic items etc. All such buying for the year should be placed for this period in such a way that you make the most of these offers prudently. As dhanteras would be not very far, lady of the family would ask for gold buying for sure. It is suggested to buy a specific quantity of gold ETF and take the blessings of Goddess Lakshmi every dhanteras. By this way, you would not only follow the rituals, but also collect a good quantity of gold ETF in a few years. When needed, this can be taken in physical form or sold to take cash. Hence, you can start a SIP in Gold ETF from this dhanteras onwards.
A number of companies provide bonus to their employees during festive season. You can use the bonus to pre pay the home loan every year. This would help you in saving on the front of interest outgo as well as lower the burden of debt.
December: time to think about the sunset days
As the year would be heading towards its end, there would be no better time than this to think about the life after retirement. You should understand the fact that along with fulfilling all the responsibility, you have to save and invest some money for future. If you would do this, you won’t have to worry about the monthly expenses after retirement and you would be able to live the life at fullest. You may start a SIP in mutual funds for making a corpus to help after the retirement.
February: complete the proper execution
As the financial year would be around its end, it would be better to calculate the actual tax liabilities. This calculation would give a fair idea about amount for which the investment is to be done for the ongoing financial year. Proper execution should be completed by this time accordingly as far as tax planning for the financial year is concerned.
If you are able to execute this plan in financial year 2013-14, there would be less chances of repeating the same mistakes on financial front in year to come. It would help you in living the life with a better financial security. Besides, you would be placed in a better position financially in order to fulfill the dreams and goals.