Introduction
The new financial year is about to start. This is the best time to look up to your finances and set financial goals. This can save you from the hassle of investing at the time of year ending. This article will guide you with some tips that can help you to set financial goals in the coming new financial year.
Tips for Setting Financial Goals in FY23-24
Here are the top tips that will help you to set financial goals in FY23-23:-
- Analyse Your Current Situation
While setting financial goals, the first thing one needs to do is analyse their current financial status. This can be done by observing one’s savings, investments, debts, etc. This provides proper direction to set financial goals.
- Goal Orientation
Now as you know your current situation, it’s time to focus on your financial goals. Firstly list down all goals you want to achieve in the current year and coming years. Divide your goals into the short-term, medium-term, and long-term. This will help you to take investment decisions.
- Set a Budget
Before you allocate money for your goals, it’s necessary to set a monthly budget. Analyse monthly expenses and determine how much money you need to run the house on monthly basis. Set aside that money every month. The remaining amount of money can be used on savings and investments.
- Pay off All Debts
Before you start investing it’s necessary to clear all debts. Pay off all your high-interest loans. This includes credit card dues and personal loans. This needs to be cleared before you start investing for financial goals.
- Create an Emergency Fund
Covid19 pandemic has made everyone realise how important it is to have an emergency fund. An emergency fund can be created by setting aside six months of monthly expenses. These funds then can be used in emergencies like losing a job. These funds can be kept in liquid mutual funds or fixed deposits.
- Update the Insurance
You shall review your insurance at the start of the financial year. This is the best time to check the insurance and make the necessary changes. If your income has been increased it’s time to update the term plan. Health plans too shall be updated with changes in marital status and change in income.
- Start Investing Early
Instead of waiting to start financial planning at the end of the year, it’s better to start investing early at the start of the financial year. This will give you enough time to plan your investments. You don’t have to make a hasty decision and invest in the wrong products if you start planning investments from the start of the financial year.
Debt mutual funds and liquid mutual funds can be preferred for short-term and medium-term goals. Stocks and Bonds can be preferred for long-term goals. PPF and NPS can be preferred for long-term goals as well as tax purposes.
- Monitor Your Investments
After you have started investing, it’s necessary to track and monitor the investments. You can make changes in your portfolio if certain investments are not performing well. By properly monitoring your portfolio, you would be able to understand when to exit from the investment.
Conclusion
Financial goals play an important role to achieve financial freedom. Starting of the financial year is the best time to review the investments and start financial planning for the entire year. This will help you to be organised enough in managing your finances.
