7 Steps to Foolproof your Financial Goals in 2024

The year 2024 is a watershed for all citizens of India, especially in terms of managing personal finance. This is the perfect time for everyone to start working towards their main financial goals. Your goal may be buying a new home or getting an early retirement. The earlier you start, the better it will be. Keep in mind, however, that the best of plans can only be successful if they cover all variables and unpredictable situations and account for both known and unknown risks.

Here are some ways to foolproof your financial goals in 2024:

1. Choose your Income Tax Plan:

The new budget presented in the year 2021 have re-shuffled existing Income Tax Slabs. By choosing a reduced tax plan, people can now forego all tax-saving related commitments or continue with the old tax regime. If you were already saving through Home Loans or continuing investments, you may want to continue with the old tax plan, but if you were already paying full tax without much saving, you will benefit a lot from the new tax regime. Also, people who are just entering the workforce can benefit a lot from the new Income Tax System. This is a very important step to foolproof your financial goals in 2021.

2. Create a budget:

A budget is your game plan for financial success. Just like when you travel from one place to another, you develop a route plan first. It is important to have a monthly budget which will cover all aspects of your spending and earning. Consider all the money you can expect to be coming to you in a given period. Map all the expected spending that you will be required to undertake in the same period. Treat your savings as an expense and also start saving for periodic expenses. Once on budget, it is important to stick to it. Do not get disheartened if you are not able to stick to your budget for the first 3-4 months. Once you get the hang of things, it will become much easier to follow the plan.

3. Create an emergency fund:

The Emergency fund is meant to be kept aside for situations where you could not have predicted an event. Layoff at the workplace, the unexpected occurrence of any medical emergency, road accident, need for surgery not covered by medical insurance are all examples of emergencies. There are two basic steps of creating an emergency fund. Always start with at least two months’ full salary in your Bank Account, which must be maintained and replenished on a priority basis after every time you use that money. If you do not have any consumer debt, keep at least eight months’ or preferably one years’ salary as an emergency fund. Always keep two month’s salary in Savings Account as readily accessible cash and rest as Fixed Deposit (FD) in banks.

4. Fast track your Personal Loans and Credit Cards:

No loan is better than a paid-off loan. If you have any consumer debt like Personal Loan or revolving Credit Card debt, you must fast track the repayments. Call up your lender to check if you can shorten your EMI payment period by paying more amount per month. If not, start a separate recurring deposit equal to your loan EMI but for half of the remaining loan period. Pay double and get rid of your loans faster. Remember, start with the loan which has the least amount remaining. The faster you see your loans being paid off, the more motivated you will feel to pay off other loans!

5. Get term insurance and medical insurance protection:

Insurance is easily the most overlooked of financial decisions. Most people today either do not have adequate insurance cover or no insurance cover at all. This may be due to lack of awareness or due to lack of financial discipline, but this is an enormous risk that a dangerously high number of people in India carry. A Term Insurance provides cover in case of life risk, and medical insurance protects you from any health risks or medical expenses. Both of these must be purchased from one of the IRDA regulated insurance companies and must be kept in force through regular payment of premiums.

6. Start investment through SIP and mutual funds:

Stock markets are one of the best ways to get the most amazing returns, but not many people have the time to dedicate towards market research. To help all Indian citizens benefit from the growth of the Indian economy, many banks and financial institutions offer Structured Investment Plans and Mutual Funds. These vehicles are considered low risk as compared to investing in stock markets but provide almost similar returns directly. The government of India also offers income tax benefits under the Equity Linked Savings Scheme (ELSS) to promote investment in the stock market without actually exposing people to the heavy risk of capital markets.

7. Start retirement saving in secured instruments:

Retirement planning is a very important aspect of financial planning for everyone. No one will be able to work for all their lives, and everyone needs to have some income source when they retire. A number of insurance companies offer retirement plans, which will provide monthly pension to subscribers as much as ten times their monthly contribution. While some plans commit to offer pension until 99 years of age of subscribers, some other plans claim to offer pension for the lifetime of subscribers. Similarly, the Government of India has also started the National Pension System in which people can contribute on a regular basis and choose their investment manager and investment plan based upon their risk appetite!

Always remember when all is said and done, it is your self-discipline that will be the biggest factor behind the success or failure of your financial goals. No matter how many tips and tricks you queue up, you are going to be the prime factor behind fool proofing any financial plan you make.