Here’s How You Can Deep Clean Your Finances

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  • 05 Feb 2023
Here’s How You Can Deep Clean Your Finances

The new year beckons a fresh start. Every crisis shows us that every penny counts, and you need to have emergency funds in place. With the financial year 2022-23 going to end soon, it’s the right time to track your finances. Now is the time to take stock of your financial condition, clear debt, diversify investments, and get your key financial records organised. This would help you set strategic financial goals for a secured future.

Tips To Re-Evaluate Your Finances Successfully

1. Track Your Finances

Undertake stock of your existing debts and tabulate them on a priority basis like the amount of debt, repayment tenure, interest rate, and so on. This will enable you to properly organise and track your finances.

2. Invest Your Idle Money Wisely

It is not prudent to let your money stay idle across your various accounts, waiting for the right investment opportunity. Draw a simple investment plan for the year for investing across mediums like mutual funds, stocks, government tax saving schemes, and so on. This will help your money to be wisely invested, generate returns on your investment, plus help you get additional savings on tax.

3. Diversify Your Investment Portfolio

Tabulate your investments to ensure that your investments are aligned to meet your long-term investment objectives. If needed, reshuffle and diversify your current investments across a portfolio of equity/debt/hybrid/index/ mutual funds, stocks, small cases and the like, to increase your returns and mitigate market volatility.

4. Evaluate Your Expenses

Maintain a monthly budget to evaluate your expenses. Identify expenses that entail higher costs and those where you can cut back on. You can even make use of online budgeting tools for personalised savings goals and budget monitoring.

5. Clear Debt

Once you have made a list of your debts, try to clear them based on priority, like high amount/interest loans first, as any default on such debts would make you shell out more in the form of interest and penalty fees.

6. Consolidate Debt

In case you have multiple debts, you can consider debt consolidation. This will help you track your finances along with timely debt repayments. Also, debt consolidation would help you to switch from a high-interest loan to a low-interest one, enabling lower EMI charges.

7. Check Credit Report Regularly

Your credit report is an important document that contains your credit score. So, check credit reports regularly, as credit report errors could hamper your credit score. Credit report errors should be immediately rectified with the credit bureau, as a good credit score increases your creditworthiness and chances of availing of potential loans.

8. File Regular Tax Returns

Ensure that you file all your tax-related returns on time for prudent tracking of your finances and being financially compliant with Indian tax laws.

9. Automate your Bill/Debt payments

Opt for automating bill or debt payments, to enable savings on time and penalty costs, thus maintaining a good credit score. These tips can help you track your finances prudently and achieve your financial goals.

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