Who said resolutions are only for January? April is the beginning of many things new… the start of a new year for many South and South East Asian countries and communities, the mark of summer and the start of a new financial year in India. April is the time to revisit those monetary resolutions – to vow to keep the personal financial books in order, this year.
Before you work on your money management for the year, it’s important to understand the outcomes of the Union and State budgets, as these will impact your personal financial planning. Knowing about the changes in the tax laws and about what is more expensive or cheaper this year, will enable you to make informed decisions. Here’s a quick snapshot from the Union Budget*:
- The highlight of this year is the increase in service tax from 12.36% to 14%. It now includes amusement facilities, concerts with entry fee > INR 500, most government to business services, among others – Apart from all services becoming a little more expensive, some services that were earlier exempt now attract service tax
Personal savings and Investment:
- There is an increase in sectional investment slabs in 80C and 80D – More savings and investment limits and increased health insurance cover are now available
- Higher transport allowance
- The tax exemption on maturity for the Sukanya Samruddhi scheme makes it a more attractive investment tool than other debt-based options such as NSC or Fixed Deposits
- Inclusions of more areas under 80G to encourage donations
- Price reductions in 22 categories, including LCD and LED panels and lights, computer tablets, microwave ovens, lower priced footwear amongst others
*Do refer to your respective state budgets as well for a comprehensive understanding.
With this in mind, you’d now need to know what to spend and save on. The start of the financial year is the best time to make significant and effective changes in money management. In the famous words of Aristotle, ‘Well begun is half done’! This April on, strive to give your personal finances a sense of symmetry.
- Use a simple expense tracking app like Money View. This will help you understand your expenses, set timely alerts and manage your income better
- Start your investments from week one. Set, reset and re-evaluate your financial goals. Scout for the best tax breaks and start saving for them from the beginning of the year. If you find it difficult to get going, set aside 15% of your monthly income every month and see where that leads you. Make sure you decide your investments based on your risk appetite.
- Check your debt situation. The start of the financial year is the time for appraisals and hikes. Use it wisely; repay some of your higher interest debts like credit cards and personal loans
- Plan ahead! Holidays are significantly cheaper when you plan ahead. And plan for travel in the off season. Hotel and flight deals help you reduce your travel budgets.
- Make monthly budgets and sub-budgets on various categories. For example Rs. 10,000 on eating out, Rs. 5,000 on fuel etc. The Money View app acts as a personal budget planner, that will help you track your spend pattern across categories. This will help you understand your spend behavior, which will allow you to make amends accordingly.
- Keep a watch on your credit score. A good credit history will enable you to get the best interest rates when it’s time to buy a new home or car. If your CIBIL score is over 750 it means you will be the good books of banks
- Unclutter your life! Clear unnecessary things around the house. Recycle / Upcycle / reuse things that are not in use. Check for barter/ pre-owned deals before deciding on new purchases.
Want to learn a few more tricks? Read our blog post The cut back month.
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