6 money moves to make in 2020 to get your finances in shape

If you want to welcome the New Year with a bright financial outlook, why not give yourself a clean slate and work towards your financial well-being. Here are six smart money moves from Kedar, to consider if you want to have a financially healthy and happy new year.

Author:Kedar Patki | Date:31 Dec 2020 | Time:18:25:00

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A New Year give us an opportunity to reflect on where we are in our lives and what our wishes are for the next 12 months. Some might wish to get healthier, others might wish to travel the world. But if you want to welcome the New Year with a bright financial outlook, why not give yourself a clean slate and work towards your financial well-being. Here are six smart money moves we recommend you make to have a financially healthy and happy new year.

Create saving goals

Estimate your inflows each month and pay yourself first. This means that you are saving before you do anything else. While it is important to spend your inflows on needs and fun, a habit of small savings goes a long way in assuring that fun continues. One way of achieving this would be to put aside a portion of your money specifically for savings, and then bills, and then what you have left, you can spend on coffee and fun activities.

You can create saving goals for:

1. Emergency funds: Keeps your head high even in difficult situations

2. Retirement: To ensure fun continues

3. Vacation: For Fun unlimited

Get yourself an Emergency fund

As a thumb rule, set aside around 4-6 months of your family’s living expenses need to meet with any unexpected circumstances. This will help you avoid dipping into the funds you have planned for your other essential financial goals.

An Emergency fund is must have for all of us and if you haven’t created one already, now is a good time to start. For those who already have an emergency fund in place, make sure you review your fund in regular intervals and top it up in case of any shortfall.

Invest in Life Insurance

Whether you already have life insurance, or you’ve been sitting on the fence, investing in life insurance is a way of showing you care about your loved ones’ futures. If you already have a policy in place, think about how much has changed since you last bought life insurance. As you progress in your cycle of life, it is imperative that you review adequacy of cover. After all, it is a happy situation to be in as you are growing in your stature and improving your lifestyle.

Although it is important to get insurance and make investments, do not mix the two, look for separate solutions for each.

Increase your credit score

Having good financial discipline helps, literally. Improving your credit score not only helps you save money but also helps you land your dream house, waive deposits on certain bills, and more. Your first step is to check your credit score and report. Getting incorrect items removed from your credit report can potentially save you thousands in interest later.

To improve your credit score, you can also:

1. Pay off credit card debt and keep your credit utilization rate low

2. Pay off credit cards and loans on time

3. Reduce your debt-to-income ratio

Pay off debt

High-interest debt can drag down your credit score and harm your overall financial health since compounding interest works against you. It’s essentially the snowball effect: Not only do you accumulate interest on your initial deposit, you’ll also accumulate interest on the interest you just earned.

Paying off your debt can get rid of a heavy weight off your shoulders. After all, surplus funds with you are probably earning much lower for you than the interest you are paying.

Once your debt is paid off, you can focus more on savings, vacation, retirement and more.

Tax Saving – Start Early!

Do not wait till the last minute to do your tax planning. Start saving for tax at regular intervals with the help of the right tax saving products. This will avoid any last-minute ad-hoc investments in tax saving products and also helps you build wealth in the long run which could fund a portion of your retirement corpus.

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Kedar Patki

Kedar Patki, with his extensive career spanning over two decades, comes with a demonstrated history of working in the insurance industry. He spent a majority part of his professional journey in the realms of finance and operations, both in India as well as in the overseas markets with his specialisation in Planning& Budgeting, Strategy, Accounting, Tax, Management, Offshoring and Insurance. Prior to IndiaFirst Life Insurance, Kedar was a CFO at IDBI Federal Life Insurance and has served several companies such as Tata AIG General Insurance, SBI Life Insurance, AXA, Bajaj Allianz General Insurance and Akzo Nobel India, where he managed regulatory reporting, investor relations, and relationships with industry associations and forums in addition to core Finance responsibilities. At IndiaFirst Life, Kedar is responsible for managing end-to-end Finance, Planning & Budgeting, Taxation and Investments operations of the organisation. He is a commerce graduate from the University of Pune and a qualified Chartered Accountant from the Institute of Chartered Accountants of India (ICAI).

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