2018 is here – Simplify your finances in 7 easy steps

New year 2018 is here. A new year is always a great time to start/restart your life for better. It’s a time to re-haul your life, review and take steps to remove negative components from your life and move towards positive.

One excellent component to re-haul is your financial life. Be it saving for your retirement, saving for marriage, saving for kids education or be it the repayment of debt which is hovering on your head.

You can simplify your financial life in 7 easy steps this year. The only effort required from your end is commitment to put your financial life in order. So take charge of your life, use the new year as an opportunity to boost your finances.

1. Take inventory of all your Debts:
   Be it home loan, credit card balance, vehicle loan, personal loan you took for vacations, loan against property or education loan. List them down in descending order of the interest rates. Once you have the list, start attacking the highest interest loan with extra payments regularly.
   
   This way you can save loads of money in terms of outgoing interest on these loans. Who doesn’t want to be debt free – so target the same for yourself.
   
   Consumer debt & personal finance

• Close all the unused bank accounts and cut off your unnecessary subscriptions:
  List down all your bank accounts including ones which you had opened many years ago and you are not using it anymore. Keep one personal account and one business account – close rest all of them. Remember all bank accounts require certain minimum balance and you do not need many bank accounts. With payments going digital way, it’s better you close all your accounts except one.
  
  This will free up a lot of money for you which can be used for debt repayment or investment. Similarly review magazine subscriptions, newspapers subscriptions etc as in this digital age mostly all publications have online version and that too free.
  
  This will save you from money leaks and the saved money can be utilized in a better way for further investment.
  
  What are money leaks? How to find out your money leaks and plug them?

• Review your insurance needs:
  Be it life insurance, vehicle insurance, homeowners insurance or health insurance. Review all of them, compare premium for the similar sum assured with other service providers. Call them up and bargain for the premium amount – there is always a room for bargain. Look at your age, your other family member’s age and tweak sum assured based on the needs and finalize the most cost effective plan for yourself. Repeat the same exercise for your vehicles.
  
  You will be surprised to know the amount you can save by switching to different service providers / porting the policies to other service provider.
  
  Why you need insurance ?

• Review and tweak your investments:
  Be it PPF, Mutual funds, Stocks, shares, Fixed deposits, recurring deposits, post office deposits or commodities. Review all of them in terms of gains since you invested in them and what current rates they are offering. You might want to close down some dead investments based on the returns or shift to more fruitful ones. Based on your requirements and goals, tweak the investments in order to gain better returns. It’s always good to do a thorough review of your investments once a year and rejig your portfolio.
  
  If you have not yet started investments, it is right time to start investing gradually towards your goals in life so that you have enough funds when you reach your life goals.
  
  Delaying investments can cost you dearly 
  Diversify your investments

• Make a budget and stick to it for the entire year:
  Budget is one of the major step on the road to financial independence. If you master the art then you can be assured of sealing the money leaks in your month on month expenses. If you are making your budget for the first time, there are good chances that your spending is more than your income otherwise you would not be taking pains to make the budget. Don’t think it is complicated. Keep it simple to suit your needs and it can work wonders for your financial life.
  
  Once you have data for a few months – say three months you can see and analyze the expenses you have incurred under different heads. This will help you free up money for fruitful investments.
  
  How to make a simple budget 
  A simple budget can save you from 5 big troubles

• Use tax exemptions to minimize your taxes:
  Government runs many schemes which can be utilized to minimize the tax impact by investing in them like RBI bonds, infrastructure bonds. Investment towards PF, PPF is also tax exempted so as investments in equity linked mutual funds and life & health insurance.
  
  If you are running a business many exemptions are there in terms of expenses incurred towards the business.
  
  File your returns efficiently, take appropriate steps to pay minimum tax using exemptions. This will help you with more money at hand which can be utilized to invest more efficiently.

• Educate yourself:
  You may not be an expert on finances but basic investments through various vehicles is not a rocket science. A lot of literature is available online which helps you in taking informed decisions. Do not rely solely on the other so called financial experts from your neighbourhood and local banks to help you out with your investments.
  
  A little reading and self education can do wonders for you. So take out some time from your busy schedule and start reading about personal finance and investments.

One final suggestion is to keep a piggy bank at your home to save all the loose change you gather. This will also inculcate savings habit among the other members of your family, especially the kids.

At WS, we always stick to the policy that “your money is your money“. None other than you would be able to manage it better. Others, who claim they can manage better, have their conflict of interest since they would be doing it for their livelihood. When they earn commissions for suggesting you the investment avenues, they can never be honest with you.

Wish you a very Happy and Prosperous New Year 2018 !!!