Startuptalky published an article by Sheikha Tyagi on regulating personal finance, which she began by defining this financing based on what was mentioned in a book of the same title written by E. Thomas Garman and Raymond Forge.

The definition says, "It is the study of resources, personal and family, that can be considered important from a financial perspective. It involves spending, saving, protecting and investing in these financial resources."

The main aspects of personal finance

The writer says that the reason most people fail to develop a successful financial plan is a lack of awareness.

Although people put a lot of effort into managing their finances, they often overlook important areas.

Before going into the ten steps, the author discusses the five main aspects of personal finance:

saving

Warren Buffett said, "Don't save what's left after spending, but spend what's left after saving. This is really great advice. You can't predict when a financial crisis will hit you. So, it's best to stay prepared."

Savings help you to keep calm in such situations and look for a solution.

According to experts, your optimal savings should be equal to your expenses in 6 months.

investment

As Benjamin Graham said, “Successful investing is about managing risk, not avoiding it.”

Many people confuse saving and investing to be the same thing.

And they are not.

And while investing, you are actually using your money to make more money.

There are a lot of investment options available in the market such as mutual funds, real estate, stock market, etc.

To choose the right investment options, organize them into short, long and medium term goals.

The option that best suits your requirements and time frame must be chosen.

financial protection

According to the World Health Organization, financial protection is at the core of universal health coverage.

If chosen well, they provide a safety net for you and your loved ones.

The key is to make sure you pay up front and pool the resources to save you from financial hardship.

Financial protection ensures that these impromptu situations do not derail your savings and investment plans.

Insurance is the classic financial protection.

tax plan

You can save on taxes by selecting the right types of investments and purchases.

retirement plan

“Retirement planning is not something that we can put off until a later date. You should start planning for your retirement now. This is actually because you never know when you will stop working.

How do you organize your personal finance in the new financial year?

After clarifying the main aspects, you are ready to organize your personal finance.

Here are some tips to help you organize your personal finance in the new financial year.

1. Start early

It is better not to wait to plan your money.

Starting early helps you make calculated decisions.

2. Plan your budget

Living within your means is important.

Plan your expenses and savings for the coming year at the beginning.

Review the previous year's income and expenses to make the right decision.

Set your financial goals and set your cash flow accordingly.

If you have received a good bonus, try to pay off your loans in advance, at least partially.

Our income and aspirations play a major role in determining our financial plan.

This will help you determine your spending.

Therefore, you can strike the right balance between spending and saving.

Try to compete with the previous month's budget, as it will help you grow as a smart spender.

Try to set goals and make efforts to reach them.

3. Create an emergency fund

This is the fund that will help you take on unexpected expenses.

Typically, financial experts advise keeping 20% ​​of each salary in this fund.

According to Forbes, you can create an emergency fund by following a few steps:

Set a target date to start your fund, reallocate an amount of existing assets, establish a monthly liability, create a separate pooling account, transfer additional income to this fund, and define your insurance needs.

Insurance is not only meant to provide for taxes, but it is a way to serve critical needs.

The start of a new fiscal year is a good time to determine if you have adequate insurance coverage.

Financial experts believe that your insurance cover should be 10 times your annual income.

Also, it is important to review your insurance needs according to your changing life goals, for example, if you are planning to get married, have a child or buy a home.

4. Review your investment portfolio

It is always a good idea to review your investment portfolio at the beginning of a new financial year, and track the market performance of your current assets to understand how it has changed since last year.

Adjusting your investment strategy is especially important if you have experienced any major changes in your life in the past year.

For example, if you are about to retire, you may want to invest in a good retirement plan.

Evaluate your needs and invest accordingly.

5. Plan to spend your annual bonus

If you've received an annual bonus, don't let the money go to waste.

Plan your spending well.

For example, if you have a loan, you can pay it partially or fully in advance.

6. Plan Your Taxes

Planning for taxes at the beginning is a great way to start the new fiscal year.

It's actually part of financial discipline.

To start tax planning, you first need to define your tax bracket.

Tax rates vary with income levels.

If you know your tax regulation, you can easily calculate your tax expenses.

This will help you know the tax savings requirements.

7. Determine your debts

It seems easier said than done.

Anyway who wants to stay in debt?

According to the central bank, there are certain strategies for controlling your debt.

Which:

Don't buy anything you can't buy without a credit card.

Pay off your credit card balance in full each month.

Focus on your needs, not your wants.

Plan your budget according to your financial goals and requirements.

Determine how many cards you have.

Keep a master sheet to keep track of your expenses.

8. Monitor your credit score

It is almost impossible not to have a credit card in today's world.

However, it is critical to properly manage your credits.

A strong credit report is required if you are planning to take out a loan or mortgage.

For this, it is best to pay off your credit every month or at least try to maintain a minimum credit utilization ratio.

It's also a good idea to sign up for credit agencies that provide you with regular updates on your credit score.

This will not only help you identify errors, but also help you detect any fraudulent activity.

9. Keeping financial records

It is always important to keep your financial records organized.

This will help you keep track of any discrepancies in later stages.

Traditionally, a folder or drawer is used to keep all payment receipts and bills.

However, this increases the risk of losing or forgetting one or more of them.

There are currently a number of applications available to keep track of your money.

These online services help you separate old invoices and receipts from new ones.

Also, you can set reminders for upcoming payments.

This saves you the hassle of searching every document in your folder while trying to find one.