The new year gives a new ray of hope to our lives. Whether it's related to our career or owning a home, we all wish to achieve something or the other in the New Year. But, to accomplish such dreams, sound financial advice and planning are essential. Proper financial management can help you understand your goals better and encourage you to manage the rising inflation more effectively.
11 Financial Tips to Follow in 2022
1. Create a Financial Calendar
Creating a financial calendar is the first financial advice for making your 2022 easier. Put together all the major expenses you plan this year. You may want to buy a brand new bike, or maybe a used car on loan, whatever your plan is, make a note of it in your calendar. You must also mark the due date of your taxes, credit card bills, and personal loan EMIs, among other things.
2. Keep Track of Your Expenditures
After you have marked all of your essential deadlines on your calendar, the following step is to prepare your monthly budget. One of the most important personal financial management tips is to keep track of your expenses throughout the first two or three months of 2022. This will assist you in making the most efficient financial plans for the rest of the year.
3. Work on Improving Personal Saving Rate
Another great financial planning tips is—if you are a young working professional with little or no savings, cut down on your expenses and improve your personal savings rate. Retirees, on the other hand, may choose to start some consulting services from their homes to earn some money while also increasing their savings.
4. Allocate a Portion towards Investment
Investing is an important part of achieving financial stability. It's one of those crucial financial tips that young individuals, as well as those over the age of 40 years, should keep in mind. When you invest a portion of your income, you keep yourself ready to face any financial emergency. Whether it's medical uncertainty, sudden losses in business, or layoffs in your organisation, investment assists in every difficult time.
5. Plan Your Retirement
Keeping the growing inflation and the rising health concerns in mind, you must plan your retirement well ahead of time. You may opt to invest in various government schemes such as retirement schemes, pension plans, or may choose to open an RD at the local financial institution. If you are already retired and had not followed these financial planning tips at your young age, the two options you are left with is either opt for a loan against property or choose to go with a reverse mortgage loan to meet your necessities.
6. Pay off Your High-interest Debts
To make 2022 financially easier for you, compile a list of all the high-interest debts owned by you. Once you have found out what you owe, you can take out a personal loan to consolidate your debts and pay them off all at once.
7. Opt for an Insurance Cover
Are you investing enough in health insurance to be prepared for any medical expenses related to yourself and your dependent family members? You can get insurance cover for many things such as health, life, car, home, two-wheeler insurance, and more. Insurance saves you from hefty bills by providing extensive cover. Therefore, to make your 2022 stress-free, follow this financial tip and trick and opt for sufficient insurance cover.
8. Start an Emergency Fund
During difficult times, having emergency funds can spare you from a variety of repercussions. Such type of funds is the corpus money that serves as a safety net in the event of an unforeseen and unplanned event.
Also Read: How Personal Loans Help During an Emergency
9. Plan Your Taxes
Why pay a substantial share of your income in taxes when you can save a lot on the same? The Income Tax Act of 1961 has certain deductions and exemptions provisions related to loan interest payments, insurance premiums, rent payments, and many more. It is recommended that you take the financial advice of an expert to help you plan your taxes.
10. Minimise Your Extravagant Expenses
Regardless of your age or income, the most important financial tip is to cut down on unnecessary lavish spending. Avoid regular ordering of food from your favourite restaurant and switch to homemade meals, cut down on needless shopping and movie dates, and so on. Many financial gurus advise against using credit cards since they encourage us to spend more.
11. Use Surplus Cash Wisely
Sometimes you get surplus cash in the form of fixed deposit maturity, performance bonus, salary hike etc. When such a situation arises, instead of depositing it in your account to earn 4% interest, use it towards debt payments or reinvestment in some great mutual funds or other lucrative schemes.
Also Read: Benefits of early financial planning for your children
To Conclude:
Many people consider January to be financial literacy month. During this month, you can acquire several financial tips and tricks from both novices and experts. Knitting together the tiniest bits of diverse advice above, we hope these 11 effective personal financial management tips will assist in making this New Year financially easier.
