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A new financial year has begun.
So let me first wish you a very Happy New Year! 🙂
Since 31st March is long gone, most of you would be through with tax savings – something that bothers so many people. But does it mean that you are done for now? Or atleast till the next March?
As far as previous financial year is concerned, the answer is yes.
But sadly (and most people don’t realize this) tax planning is not everything. Infact, its not even the main thing. There are other bigger agendas that you should be taking care of.
Unfortunately, people realize about these agendas much later in life and then are forced to repent about it. They give disproportionately high importance to saving taxes, when what they should actually be doing something about using money as means to achieve their real life goals (isn’t that the real agenda? 🙂 ). Beating market or others is fine but it won’t be of much utility if you don’t get the right amount of money back at the right time.
I know… all this sounds boring at the start of a new financial year.
After all, most people start worrying and then hurrying about saving / investing / tax saving at the last moment – generally around January, February and ofcourse March.
So why am I talking about all this now?
Because you have ample time left (11-12 months) to plan your finances.
Since you have enough time at hand, you don’t need to hurry.
Since you don’t need to hurry, you are under no pressure to take financial decisions quickly.
Since there is no pressure, you can think about everything at ease and then take sensible decisions.
And since you can take sensible decisions (with or without help), chances of being wrong are reduced and this can go a long way in putting your financial life in order.
Unfortunately, it’s general human nature to push off thinking about personal finances until the end of the year, if at all.
But the best time to think about these things is indeed at the start of a new financial year.
That is why I think that for you, next 1-2 months will be very crucial. More so if you have had bad experience(s) with money in recent past – like being unable to save, having no savings after years of service, taking big loans in name investing in real estate, being pushed into investing in wrong products, losing money in stocks, etc.
So if the above description matches you, then keep reading.
Don’t worry… I will not ask you to make any New Year resolutions for better managing your money here.
I am asking you to take a pen and a paper and write down what’s good in your personal financial life and more importantly, what’s not.
Please don’t use your computer or mobile for this exercise.
Seeing your own writing can have a big impact on your thinking. And when we are talking about your finances, there is a need for big impact to push you into taking action.
Here are few things to think and right your answers (if possible in detail) about:
- Do you know why you are actually saving and investing money, i.e. actual financial goals?
- Do you know whether what you are saving is enough for all the goals?
- Saving for retirement is not the only goal. Are you saving for others?
- Have you taken on too much debt in recent past?
- Are you finding it tough to repay it?
- If you were to ‘not earn’ for next couple of months, will you be fine? Have you saved up some money for your emergencies?
- Are you using credit card like someone else will pay your bills?
- Is your life insurance cover enough? (Imagine your family’s condition with the insurance money after you die. Do you think that amount is enough for them? Here is a scary real life example.)
- Is your health insurance cover enough? Or you are depending only on your employer’s mercy to pay your medical bills?
- Have you thought how your family will be taken care off if you neither die (no life insurance payout) nor are able to earn for years (not covered by health insurance)?
- Are you investing in right products?
- Do you actually know what is the right product – assuming you know what you are investing for (1st question)?
- Are all your financial documents / papers in order? Do the right people (like your spouse) know where these documents are and how they are to be used?
- Are you saving the same amount as you were saving several years ago? Does it make sense given that your income has increased?
- Are you wasting money and saving less? Infact, do you know what all constitutes as wasting money?
- Do you know secretly that some of your financial decisions have been wrong but you are still afraid to discuss it or take professional help because it will make you look stupid?
Answers to all these questions (more tough questions) can put you in the right mindset about handling your personal finances. And that is important.
Unless you acknowledge that there are problems, you won’t be ready to take action.
And its people’s attitude towards money that affects their likelihood of experiencing adverse or desired financial outcomes, regardless of their level of financial knowledge or capability.
Planning your finances or atleast asking the right questions that push you to seek honest answers – these are things that should be done at the beginning of financial year when you have several months to think through and implement a plan.
And this is the reason that starting today, I suggest you think seriously about planning your personal finances and taking some sensible action this year. If you already have a strategy or plan that you are following, then start of new financial year is a good time to review those plans and see how you stand in relation to your goals.
Best of luck.