Review your finance planning: Things to do and roadmap for 2023

It’s that time of the year when you must have started working on the resolutions you made for 2023. You are excited and confident that you will ace all the resolutions through the year. These resolutions may relate to health, finance, career, relationships, etc. The article will discuss 5 things related to finance planning that you should continue to focus on as the calendar year hits the 3^rd month. These will help you improve your finances in 2023 and achieve financial goals in the long run.

Basics of finance planning: Things to do-and-check
 

1) Review the progress of your finances and goals

You should do a regular review of your finances. It includes reviewing your cash flows, budgeting, emergency fund, life and health insurance, financial goals, finance planning, loan repayments, tax planning, etc.

While reviewing your financial goals, it is best to take the goal-based planning approach. For example, if you want to build a fund for your child’s higher education, take the steps as below:

a) Current cost of the course

Based on the child’s current age and the time they will take college admission, calculate the number of years you have. Find out the current cost of the course.

b) Future cost of the course
 

You know the current cost and the number of years in hand. Using these inputs and education inflation, calculate the future cost of the course. You can look at past data on how the fees have increased to determine the average inflation rate.

c) Make a financial plan
 

Based on the amount required and investment time horizon, make a financial plan. Decide the asset allocation, financial products, and expected rate of return. Accordingly, you can arrive at the amount to be invested every month.

d) Invest
 

An important part when planning for anything related to finance is investing in financial products through a Systematic Investment Plan (SIP). You can also invest in a mutual fund scheme through IDFC FIRST Bank,

Review the products’ performances regularly and make changes whenever and wherever required. Follow this plan till the financial goal is achieved.

2) Make a budget for 2023
 

The next item on your things-to-do-and-check list should be reviewing your 2022 budget and making the 2023 budget. Check the money you had allocated for various categories for 2022 and the actual amount spent on those categories. If you spent more than budgeted, check how you can scale back in 2023.

While making the 2023 budget, divide it into 2 parts: regular monthly and ad hoc one-time expenses. Pay attention to the one-time expenses. These may include:

a) Annual education fees for children
b) Insurance premium payments
c) Vacation
d) Purchase of electronics/consumer goods, etc.

Some of these expenses may be quarterly or half-yearly instead of yearly.

It may not be possible to fund the above big expenses from the monthly income in the month they are incurred. So, make a provision by setting aside some money every month for these expenses.

You may have ad hoc income from an annual bonus, maturity/redemption of a financial product, etc. You can budget this money for either ad hoc expenses or invest it.

3) Review the tax plan for 2022 again and check the plan ahead for 2023
 

Have you submitted the investment proofs for tax savings for Financial Year 2022-23? If not, from January, your employer's payroll team might have already started deducting TDS from your salary. So, check and close your tax planning and complete your investments for FY 2022-23 if they are still pending.

Make the best use of all the deductions allowed under various sections of the Income Tax Act to maximise your tax savings.

*The above are just some of the sections of the Income Tax Act that allow a deduction from taxable income. These are subject to change from time to time.

4) Review the financial products that you have already invested in and plan for new ones
 

You should review your investment portfolio regularly. March is good time that you should to a review again. Changes may be required in some investments due to:

a) The chosen product is not performing on expected lines
b) Better financial products have emerged
c) The financial goal is nearing, which may necessitate moving the money from equity to fixed income.
d) The tax laws related to the financial product have changed, etc.

If any of the above reasons require you to make changes in your investment portfolio, go ahead and do it.

Re-review your finances to check whether your investment portfolio requires you to make changes. The changes may be due to improved new products or better ways of buying the same product. If yes, go ahead and make that change.

5) Choose smart financial gifts for yourself and others
 

Throughout the year, there are occasions for you to purchase gifts, either for others or yourself. People usually give traditional gifts, which the recipient may or may not find useful.

It is a good time for vacation and finance planning
 

For many working professionals, March is the month of closure (Financial Year) when they also take a break from the year-long schedule and go for a short vacation. While your last-minute preparations or holidaying may be in full swing, reserve some time for your finance planning too. Make sure you look back at 2022 again and see how the plan 2023 has started working out in its initial stage. It is the best way to ensure you are on track to meet your financial goals and achieve financial freedom.

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.