Important Principles Of Financial Planning

 

So, how should you conduct your financial life in the New Year? Read on to know the path that you must follow…

Well, another year has just rolled over. We, at Axis Bank wish that all your dreams are fulfilled in the coming year. Bearing this in mind, to ensure that the New Year keeps you financially healthy indicated below is what Budget could have in store for you and how you should adapt yourself to it…

• To begin with, it is NOT the time to replace your financial plan with a brand new one as you would do with a calendar. It is important to maintain continuity even while making small adjustments and course corrections to your existing plan.
• Your income may not witness the same jump in 2013 as it has over the past few years, simply, because corporate India is still reeling under the slowdown that our country has been witnessing off-late. So, you may need to tone down your expectations on income growth.

• On the expenditure front, the double digit inflation at the consumer level still remains a disturbing reality. You would do well to wisely tighten your belt even while hoping for some respite.

• Your savings plan may have taken a hit recently due to the unrelenting price rise. It’s time for you to put it back on track by curbing expenditure. The lethal combination of low income growth and high expenditure growth could adversely affect your future financial health. Maintaining your target savings rate should be the top priority. Remember, financial prudence demands that you pay yourself first.

• Your investments could need a bit of tweaking. Interest rates are likely to drop in the New Year. You would do well to lock into fixed deposits now at attractive rates. Gold has been on an uptrend for the past decade and may justify some caution. Equities have gone nowhere since 2007. Its recent performance has been inspiring and could well throw a pleasant surprise in 2013. Make sure you have sufficient exposure so that you do not miss the bus. Real estate prices have remained at uncomfortable levels recently and so may be the case in 2013.

• Borrowing costs are likely to come down in 2013 in tune with the general fall in interest rates. However, this should not stop you from trying to repay your loans and striving to become debt free at the earliest.

• Your current insurance could need some review to account for major changes in your family/professional circumstance and in your income/expenditure pattern. Any increase in liabilities should also be taken into account. And, do remember to pay your premium in time to keep your policies alive.

The fundamental principles of finance remain unchanged as ever. Just a bit of dynamism is what would be required to tide over the temporary circumstances. And, here’s wishing you the best of financial health in 2013!!!