A new financial year is a good opportunity to plan and manage your finances. It is strongly recommended to review your investment portfolio at least once annually. Also, this is a good time to improve your credit score. A good credit score is required when applying for a personal loan or any other type of loan.
Apart from this, you also need to consider taking a look at some new investment plans in the new financial year that you can make. This article explains some of the best money management tips that you can follow this financial year.
1: Start a SIP
Many people have a habit of starting their investment plans later in life. Keep it a habit of checking whether or not you have made an investment for claiming an 80C deduction in March. By starting a SIP fund from April, you might not have to worry about planning your taxes at the end of the financial year.
By investing in a SIP of INR 12500 each month, you will by default invest INR 150000 which will further make you eligible to claim 80C deduction.
2: Open an NPS account
The NPS has overcome some of its limitations recently. In the year 2015, the Budget allotted permission for additional deductions of INR 50000 under Section 80CCD (1b). Whereas, in 2017, over 40% of maturity corpus were made tax free. Today, 60% of the amount withdrawn at the time of maturity is been made tax-free. Moreover, you can opt for a higher 75% allocation to equity funds.
So, if you still don’t have an NPS account, now is the time to have one.
3: Family Medical Insurance
Whether or not you have a family to support, taking medical insurance is essential. Over 70% of people in India do not have insurance to overcome medical expenses. Taking medical insurance is one of the best ways of preparing for a potential medical emergency. Apart from this, having medical insurance will prevent you from depleting your savings.
4: Do Not Invest Too Much
Although sorting your investment and savings for the rest of the year is a good idea, the entire tax planning should not be done at one go. The reason behind this is the Interim Budget that falls in July. Changes made in the rules can have an impact on your investments and thus your financial future. Hence, it is highly advisable to avoid investing hugely in any tax saving avenues.
5: Submit Form 15H, 15G
The interim budget has increased the TDS threshold for bank and post office deposits from INR 10000 to INR 40000. For senior citizens, the TDS threshold is INR 50000.
On the other hand, under Section 87 for senior citizens – no tax is applicable if the annual income falls below INR 5 lakh. If your income for deposits surpasses INR 40000 mark but your total annual income is below the basic exemption of INR 2.5 lakh or 3 lakh, submit Form 15H or 15G with your bank.
6: Invest the Increment
Majority of the working people receive their annual increments in the month of April. Increased salary will eventually increase your expenses and in all this, investments are easily forgotten. Hence, when your salary increases, look out for some best places to invest money.
7: Create an Emergency Fund
It is always wise to keep aside a certain amount of money in case of an unexpected financial crisis. Having this amount will prevent you from digging in your savings. So, make sure you have an emergency fund for such situations. In case, you already have one, keep reviewing it on a regular basis and keep adding money to it whenever possible.
8: Analyze Your Debt Situation
Keep a track of your financial outflow towards your home loan EMIs, car loans, credit card payments and more. Before taking any loan, make sure whether or not you are eligible for it. Do not take loans that would take a toll on your finances in the near future.
9: Open a PPF Account
Adding a small amount into your PPF account will give you tax-free returns. When planning your financial future, you need to take into consideration your entire family goals and your retirement plans as well. We recommend seeking professional help and guidance when planning your finances this year.
Making investment is a wise way to manage your financial future. Any small financial urgency can be handled by taking personal loans. Be it a financial emergency, a long trip or your dream wedding, you no longer have to dig in your savings or investments.
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