If you are looking to organize your personal finances in 2018, there are several steps that you can take in this regard. Here are some of them:
- Goal-based investment focus- There is a major principle guiding investment philosophies that you should adopt this year. You should always invest based on your financial goals. These may include buying a home or a car or even building a financial corpus for your retirement or education/marriage of your child. You should always jot down your goals and then invest accordingly as per the suitable durations that you have in mind. You can choose equity funds for meeting these objectives. Keep SIPs in varying monthly amounts for meeting these future goals.
- Protection matters- Always have ample protection for yourself and your family via insurance policies. You should have a pure term insurance policy that offers a minimum of 15 times of your annual income. You should also have health insurance for taking care of medical expenditure.
- Use technology- Learn new ways to use and manage money including e-wallets and other digital and online payment options. This will help you depend less on cash and will also foster greater efficiency in terms of money management.
- Pay your taxes honestly- Always declare your income honestly and accurately and do not attempt to save on taxes through unscrupulous means. Instead, you should use NPS, ELSS and tax saver FDs to save taxes along with PPF and other relevant financial instruments.
- Maintain your own savings budget- You should always have a budget for savings every month which should touch at least 15-20% of what you earn annually.
- Take loans smartly- Good loans are long-term ones like home loans which will give you adequate returns and help you build a long-term asset. In this case, the rate of return will surpass the interest that you are paying. Bad loans are credit card or personal loans since they have sky high interest rates.
- Avoid speculation in investments- There are several investment options offering you the chance to make a quick buck. These may include cryptocurrency or other new investment avenues. Do your homework before plunging into the same. Avoid speculative investing as much as possible.
- Contribute regularly to retirement funds- You should have your own plan for retirement. Invest in SIPs, PPF and insurance plans which have retirement plans. Contribute every month towards building a retirement fund of your own.
- Invest in a financial planner- Having a financial planner is a nominal investment for the all the informed insights and advice that you receive. A planner will help you channelize your investments in the best possible manner.