Creating wealth is a long-term process that you build over the course of your life. One needs to be smart about money, as it is not enough to live paycheck to paycheck as money loses its value if you don’t have a good financial plan in place.
So you need to have an intelligent strategy to make your money grow. Rely on a seasoned financial planner like Financial Planner Ann Arbor, to get your money working for you and to build a better financial foundation that benefits you in your retirement.
Here are five tips that will help you make smart financial planning this new year:
#1 Reviewing your investment portfolio
First and foremost, you need to start by reviewing your past investments and how close they are to your current financial goals. The previous year saw decline in returns for many investments.
This year, take time to review these missed targets and take appropriate corrective action in your investment plan.
The previous year might have required you to redeem some of your investment options. With a fresh start this year, it is time, you can make the choice of right types of investments to achieve your financial targets.
#2 Reassessment of your current needs
The pandemic did not only impact health, but also financial budgets of majority individuals. It required many people to curtail their spending with limited income sources available.
Now, with a fresh start this year, reassess your current requirements. Knowing how much money you need will help you allocate the right amount of funds for investments like mutual fund investments, SIPs, etc.
If you have used some of your emergency funds in the previous year, it should be a priority to replace them at the earliest.
#3 Do not ignore insurance covers
The adage health is wealth regained its importance during the pandemic. Having an insurance cover that helps take care of medical treatments is a boon in today’s day and age.
Since it is a fresh start this year, assess how much medical insurance you need in the near future.
While most individuals consider insurance as an expense, it is actually an investment to safeguard your other investment. By buying a suitable insurance policy that offers coverage for you and your family will help avoid liquidating your investments to fund medical expenses.
#4 Re-evaluate you debt repayment plan
The pandemic witnessed strain on the repayment of debt. It further went on to test the borrowing capacity of individuals with limited new income sources. Banks even offered moratorium for a brief duration for loans too.
These changes might have resulted in increased borrowings for an interim duration which need to be paid. Re-evaluation your debt repayment timelines will help you smartly plan your investments too.
Moreover, an effective repayment plan will help you achieve your financial goals with not revising any timelines. High interest loans should take a priority in repayment than lower ones.
Debt is something that should take up highest priority to have a peaceful financial future.
#5 Improve your credit rating
Banks have started to rely on credit scores to charge interest rates for loans. It means, if you have a poor credit standing, your loans might cost you more. A poor credit score can also make you ineligible for any credit facility from the bank.
Keeping this in mind, it is time to correct any mistakes that might have taken place in the past with regards to credibility. If you have a credit card, make sure to not miss repayment dates since it adversely impacts your credit rating.
Moreover, make sure to timely make payments of your EMIs (equated monthly instalments) and avoid applying for multiple credit cards in quick succession.
Now that you know how and where to invest money to regroup your finances for this new year, make the right choice of avenues understanding the purpose and importance of investing at the right time.
To conclude, a strong financial plan will help you achieve short range as well as long range monetary goals that support you and your family. Happy investing!