As we approach the end of another fiscal year, is it not crucial for salaried employees in India to take stock of their financial situation and make necessary arrangements to optimise their finances?
With March 31st looming ahead, now is the perfect time to ensure you make the most of your earnings and investments.
Here is a comprehensive 21-point checklist of what every salaried individual should consider before the deadline:
- Review Your Tax Planning: With the end of the financial year approaching, it’s essential to assess your tax liabilities and plan accordingly. Ensure you have utilised all available tax-saving avenues, such as investments in ELSS, PPF, NSC, insurance premiums, and more. Check if you need to make additional investments to reduce your tax outgo.
- File Your Taxes: Do not wait until the last minute to file your income tax returns. Be proactive and file your taxes well before the deadline to avoid penalties or last-minute rush.
- Maximise Your Investments: Evaluate your investment portfolio and consider rebalancing it if necessary. Ensure you maximise contributions to your provident fund (PF), Public Provident Fund (PPF), and other tax-saving investments. Also, consider investing in tax-saving mutual funds to optimise your tax benefits. Consult and cross-check with your office HR team to ensure that your submitted documents for tax savings are in perfect order.
- Utilise Expiring Benefits: If you have any expiring benefits, such as unused leave, medical allowances, or reimbursements, make sure to utilise them before the end of the financial year. This will help you maximise your earnings and avoid losing out on any entitlements. Consult and cross-check with your office HR team for the same.
- Evaluate Insurance Coverage: Review your existing insurance policies, including life, health, and vehicle insurance. Ensure that your coverage adequately meets your current needs and consider increasing it if necessary. Also, explore additional riders or policies that may offer better coverage or benefits.
- Plan for Retirement: It is never too early to start planning for retirement. Consider increasing contributions to your Employee Provident Fund (EPF) or exploring other retirement savings options, such as the National Pension Scheme (NPS) or retirement-oriented mutual funds. Planning for retirement now will ensure a comfortable and financially secure future.
- Set Financial Goals: Take some time to reflect on your financial goals and aspirations. Whether buying a house, funding your child’s education, or travelling the world, having clear financial goals will help you prioritise your spending and investments effectively.
- Emergency Fund: Ensure you have an adequate emergency fund set aside to cover unexpected expenses such as medical emergencies, job loss, or major repairs. Aim to have at least three to six to twelve months’ worth of living expenses saved in a liquid and accessible account.
- Update Personal Information: Review and update your personal and financial information with your employer, bank, insurance providers, and other relevant institutions. Ensure all details, such as address, contact numbers, nominee information, etc., are up to date to avoid any complications in the future. Cross-check to ensure that your email, mobile number, and full name spelling are correct in your bank account, Aadhaar, and PAN and that they are correctly linked together with the same credentials.
- Evaluating Debt Repayment Strategies: It is essential to take stock of outstanding debts, such as loans or credit card balances. Prioritising high-interest debts and exploring strategies like debt consolidation or refinancing can accelerate debt repayment and improve overall financial health. Prioritize addressing any lingering outstanding debts, whether owed to a friend or relative, by devising a plan to pay them off promptly. Clearing these debts not only demonstrates financial responsibility but also strengthens relationships and avoids potential strain or misunderstandings. By proactively resolving old debts, individuals can alleviate financial burdens and foster goodwill, paving the way for smoother financial interactions in the future.
- Optimising Salary Structures: Reviewing salary structures can reveal opportunities for tax efficiency. Adjusting components such as allowances, reimbursements, and bonuses can help minimise tax liabilities while maximising take-home pay.
- Reviewing Beneficiary Designations: It is essential to review and update beneficiary designations on financial accounts, insurance policies, and retirement accounts regularly. Ensuring beneficiaries are current and aligned with intentions provides clarity and peace of mind for loved ones.
- Reviewing Estate Planning Documents: Regularly reviewing estate planning documents, such as wills, trusts, and powers of attorney, ensures they accurately reflect current wishes and circumstances. Updating these documents as needed provides clarity and ensures smooth asset distribution in the future.
- Staying Informed: It is crucial to keep abreast of changes in tax laws, financial regulations, and market trends. Staying informed empowers individuals to make informed decisions and adapt their financial strategies accordingly, ultimately maximising opportunities and minimising risks.
- Practising Financial Discipline: Cultivating financial discipline involves adhering to a budget, avoiding unnecessary expenses, and living within means. Looking back at the current financial year retrospectively will help you to develop Consistent good financial habits that foster long-term financial stability and resilience against unexpected challenges.
- Celebrating Financial Milestones: Acknowledging and celebrating financial milestones or achievements provides motivation and reinforcement of progress. Whether paying off a debt, reaching a savings goal, or achieving investment milestones, celebrating successes fosters a positive mindset and encourages continued financial growth.
- Investing in Continuous Education: Committing to lifelong learning is essential for staying updated on evolving financial strategies and market trends. Individuals can invest in their financial literacy by attending seminars, workshops, or online courses focused on personal finance, investment management, and retirement planning. By continuously enhancing their knowledge and skills, individuals can effectively make more informed financial decisions and adapt to changing economic landscapes.
- Engaging in Regular Financial Reviews: Consulting with Your Financial Planner for Investment Portfolio Rebalancing: It’s advisable to schedule a consultation with your financial planner to reassess and rebalance your investment portfolio. During this discussion, consider any necessary redemptions and obtain approval for such transactions. Keep in mind that capital gains up to Rs. One lakh from equity investments, per financial year, are exempt from capital gains tax. With this exemption in mind, it’s prudent to review your mutual fund holdings in line with your financial advisor’s criteria. Consider redeeming underperforming funds and reinvesting the proceeds into more suitable options to optimize your portfolio’s performance and tax efficiency.
- Cultivating a Healthy Relationship with Money: Recognizing the importance of fostering a positive and healthy relationship with money is essential for long-term financial well-being. By understanding their attitudes, beliefs, and behaviors towards money, individuals can develop healthy financial habits and make informed decisions aligned with their values and goals. Cultivating a positive relationship with money involves practicing gratitude for financial blessings, embracing abundance mindset, and being mindful of spending patterns. By nurturing a healthy relationship with money, individuals can enhance their financial confidence, reduce stress related to finances, and ultimately achieve greater financial success and fulfilment.
- Cultivating Long-Term Relationships with Financial Advisors and Seek Professional Advice:: Building solid relationships with trusted financial advisors fosters ongoing support and guidance in navigating complex financial matters. Individuals should seek out reputable advisors who understand their unique financial circumstances and goals. By fostering open communication and collaboration with financial advisors, individuals can access tailored advice, strategic planning, and investment management services to optimise their financial outcomes. If you need clarification on any financial decisions or need guidance on tax planning, investments, or retirement planning, feel free to seek advice from a certified financial planner or tax consultant. They can provide personalised recommendations based on your financial situation and goals.
- Embracing Technological Advancements: Leveraging technological innovations can streamline financial management processes and enhance decision-making capabilities. Individuals can utilise digital tools and platforms for budgeting, investment tracking, and financial planning. Additionally, embracing financial technology (fintech) solutions such as robo-advisors, mobile banking apps, and digital payment platforms can improve efficiency and accessibility in managing finances. Embracing technological advancements empowers individuals to take control of their financial lives and leverage cutting-edge resources for financial success.
By following this 21-point checklist and taking proactive steps before March 31st, 2024, you can maximise your earnings, optimise your tax benefits, and work towards a financially secure future.
Good financial planning is the key to achieving your long-term goals and aspirations.
Start today to reap the benefits tomorrow!
The author of this article is Taresh Bhatia, a CERTIFIED FINANCIAL PLANNER PRO who has authored an Amazon best seller-“The Richness Principles”. He can be reached at taresh@tareshbhatia.com
©️2024: All Rights Reserved. Taresh Bhatia
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