What are your plans for this weekend? Well, the most significant plans this year-end should be to buckle up your finances. This weekend make sure to set aside some time to review your financial portfolio and get an idea of your current financial standing. Here are a few things you can do to start your new year with the correct financial note:
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The best way to start is by charting your past mistakes. Before you start listing down your financial goals for the next year, assess your current financial profile. The insights will help you draft an error-free and efficient planner for the coming year. For example, if you have made some investments that did not work out well for you in the current year, then you can remove it from your list.
Calculate the amount of money you pay towards debt repayment and take a closer look at your current financial situation and review your financial decisions. Did you save for an emergency? Did you pay for your insurances and investments regularly?
Financial analysis helps you identify the areas that need improvement. Be true to yourself and identify the problems that are holding you back. While making a financial analysis, consider discussing with your elders or spouse to get a better idea of your expenses. A last-minute financial analysis is the best way to get a grip of your financial life. You can put your financial life back on track if you are able to manage your finances efficiently in the coming year.
See Also: Basics of Financial Planning
Year-end is the best time to re-shuffle your financial portfolio and stir things up. Though you may sometimes find it overwhelming, it can help you figure out better ways to handle your personal finances.
Since planning for personal finances varies from one individual to the other; the process of remodeling your finances also varies across individuals. You cannot make it solely based on what you wish to achieve. Which re-modeling your finances you must consider various factors like your current income, family obligations, your total debt, your repayment capacity and the number of emergency funds you have to take care of unexpected situations.
Don’t make drastic changes to your investment plans. If your current plan is fetching you good returns then you should refrain from making changes. Incorporate changes only if there are grey areas that need correction.
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Budgeting plays a crucial role when it comes to good financial planning. If you have not planned your budget then its time you take budgeting seriously. Track your monthly spends and start listing them down. Once you are done with the listing part, try and allocate a budget to each of them. This way you can keep your excessive spends and you will not have to face a cash crunch in any situation.
People who already have a budget in place must review their budgets before the year-end. Ask some legit questions when you revisit your budget:
Your new budget must be designed based on all of the above factors. Design it in a way so that it helps you save money without affecting your lifestyle. Budgeting doesn’t mean excluding lifestyle expenditures, rather budgeting means you only get rid of your unnecessary expenses.
See Also: Importance of Financial Planning
The end of the year is the perfect time to review the performance of your investments. Checking your investments is a good idea as you can gauge the performance of your assets and re-align your portfolio as per your financial goals.
If you have a well-diversified investment portfolio, but, one of the assets is not fetching good returns then now is the time to research better investment opportunities for the next year.
Some people have invested in volatile investments like stocks and mutual funds. If you want to change your investment mix then you can re-balance your portfolio to get a perfect combination of stocks and bonds in your investments. Conduct a risk vs. Return analysis of your investments before making any changes to your portfolio. You may also seek the advice of a financial advisor for better guidance.
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