Annual Financial Checklist 2021: Here’s how you can keep your finances in shape

For tax professionals and businesses, March-end is the most bustling time with tasks such as filing belated ITR (income tax returns) to booking profits in equity mutual funds and stocks, which need to be completed before March 31, 2021.

March 31st is the last working day of a financial year, and April marks the start of a new financial year. Experts say the new year is the right time for people to reflect on their goals and investments to ensure that they are on the right track.

For better returns, proper insurance protection, and tax-saving, the new year is the right time to take such important financial decisions relating to savings and investments. It is time to take a step back and conduct a few checks to ensure that you are on the right track with your financial goals.

To do so, experts say, you need to first understand your current financial situation, and then take any corrective action, if necessary.

Reviewing goals – Set goals, you haven’t already. See to that your risk profile, financial goals, and investment time-frame, are all in line. Checking the overall portfolio is the right time to take the help of a financial advisor, and find out how you are doing in terms of your financial goals. Other than human interaction, there are various digital platforms that help with reviewing a portfolio nowadays. Keep in mind that you need to revise and modify your investment plans, only if your existing asset allocation is not in line with your financial goals.

The right time for Tax Saving – Most taxpayers wait to do their tax planning and then panic at the last minute. Industry experts say the starting of the financial year is the best time to start tax planning and saving for tax with the help of the right tax-saving products. Properly, planning taxes from the starting of a financial year, one will be able to avoid any last-minute investment decisions in tax-saving products. This will help investors make meaningful investments and help build wealth in the long run.

Evaluating Insurance – With the pandemic, now most people have been opting for insurance, however, are you adequately covered? One can find that out based on their income and dependencies one has. For a life insurance policy, one needs to make sure the dependencies or the family are properly covered, so that the family’s ongoing expenses, liabilities (if any) are covered and also fund major life goals, in case of an unforeseen event. Additionally, for both the policyholder and the family adequate health insurance cover is necessary. If you already have an insurance cover that you think might not be adequate now due to the rising medical costs, you could opt for top-up or super-top up insurance cover to keep you insured.

Understand your debt situation – This includes your money outflow towards your credit card payments, home loan EMIs, personal loans, car loans, etc. You need to keep a check on your ongoing debts and understand how much debt will be comfortable for you to take on, on a monthly basis, without any stress on your cash flows. Note that, taking too much debt will have financially damaging effects in the long run, along with harming your credit score.

Emergency corpus – Most people have exhausted their emergency fund, in the past year, during COVID-19. However, experts say, one should continue investing towards creating an emergency fund and keep maintaining it. If you are just starting, start with trying to accumulate 4 to 6 months of your/family’s living expenses. So that you have a financial backup in case of any unexpected circumstances, and you do not have to dip into your savings. Also, review this fund at regular intervals so that in case of any shortfall, you can top it up.