Gosh, half of January 2017 is already over. Time sure does fly! Have you thought about what you’re going to do this year? Make more money, save more money, new job, travel to new places, and so on? All of these are possible, with just a little planning and diligence from your side.
Here are 7 smart money moves to help you sail through 2017 with more fun and less worries 🙂
1. Clear high interest debt first
Do you have multiple (and maxed out) credit cards? Are you paying off a personal loan? Credit cards charge the highest interest rates to the extent that interest rates are quoted monthly, so if you love revolving credit, you’re looking at a financial disaster. List your high interest debt, clear that first and work your way downwards.
2. Make a financial budget
Unable to keep up with your spends each month, wondering where the money went? Make a budget today. Use Walnut to analyse your spends for the past 6 months or so to figure out how much you spent and where, and how often (monthly, quarterly, yearly), based on which you can create a monthly budget.
3. Set up an Emergency Fund
Life is unpredictable and a sudden illness/emergency/loss of job can mess up your finances and future plans. From your salary each month, set aside some amount that will help you see through a crisis. Ideally, the amount should be around 6-8 months worth of living expenses/commitments. This emergency fund should allow quick liquidity and be accessible to you and immediate family.
4. Pay all bills on time
This is obvious but too often, laziness takes over and bills are paid late. Multiple late payments/defaults can lead to termination of those services, and worse, adversely impact your credit rating. If you’re already using Walnut, that’s one less thing to worry about as you can see your credit card and utility bills, set timely reminders, and even pay your Visa card bills from the app itself.
5. Review your insurance coverage
Are you single with no dependents? Or married, with dependents, as well as other financial liabilities? In either case, both life insurance and health insurance is a must, not only to guard against mishaps and risks to your health and life, but also to ensure that illness/accidents don’t eat into your savings and destroy the financial well-being of your next of kin.
6. Maximise savings
With taxes and inflation, there’s not much scope to build a substantial corpus to see you through your retirement years if you just park your money in the bank. Decide how much to save every month, and automate this like in a Systematic Investment Plan (SIP) of a mutual fund. Based on your appetite for risk, you can spread your investments across multiple asset classes – from bank deposits, mutual funds, bonds, stock market, precious metals, real estate and so on.
7. Pay your taxes and file your returns on time
Irrespective of whether you’re a salaried employee, a business owner or a freelancer, income tax has to be paid. Depending on your overall tax liability and tax deducted, you may also have to pay advance tax by the stipulated dates. Once tax is paid, you need to file your income tax return, usually by July each year.
All work and no play is never a good thing. It is important to take time off to re-focus and re-align your goals and priorities every once in a while. Go travel the world, take up a new hobby, make time for friends and family.