Some Financial Planning Must Haves for 2021

You might have taken umpteen number of resolutions and broken most of them. But this year, try to stick to the resolutions relating to your financial planning, as personal finance needs a meticulous approach.

If you have not made one yet, its never too late to start planning.

The Student Saver:

The main source of your income is the pocket money you get from parents. A certain degree of prudence will help you to attain financial independence and face the future with confidence.  We’ll tell you ‘How’?

Most of you may have availed education loan and this can be a burden once the repayment starts. During the college days itself you can take the initiative to create a corpus to repay the loans.

The best way is to look for part-time or freelance jobs right away. On-line jobs can suit the student community. You can work at home on their own time and route the money to this corpus. And sites like UpGRad, Coursera,Udemy and all equips you well with different skill-sets.

If you haven’t opened a savings account, do it this year. This will help in cultivating saving habits and avoid unnecessary expenses. Also, this year take a vow to desist from impulsive purchases. Adding to this, make it a point to make a monthly or weekly budget mainly to track the expenses.

Also, you should avail the discounts on offer for them. For example, don’t lose out on scholarships, if any for any courses.

The Single and Working:

If you are single and working and don’t have an insurance cover, then take one this year. An insurance is like having a double sundae, you can get the life benefits and also tax benefits in most countries. An insurance is a good, safe investment and will also help in saving money.

When you are young, single and working, an insurance cover for 20 years or so can give you rich benefits when the insurance policy matures. Life and health insurance will also provide tax benefits under various sections of Income Tax.

This year, make a firm decision that the benefits of the credit cards will be reaped. Watch out for the points accumulated in case you are a frequent flyer or love to dine out quite often. You can also save on fuel purchases if the reward points on your fuel cards are redeemed without fail. Make sure that you redeem the reward points within the time limit.

Another resolve on this front should be not to take advances against credit cards. This can burn a huge hole in your pocket as the interest on these advances is pretty high.

The Married and Working:

Without doubt marriage is a landmark in one’s life and that comes with a lot of responsibility too. With marriage a new phase starts and you should be prepared for that.

As a married person should resolve to take a holistic approach to financial planning. Ensure adequate income to meet expenses and make sure that a portion of the saving is invested to meet future demands.

The investment for married people this year should be a collage of mutual funds, equity, insurance and fixed deposits or systematic investment plans. Parking money in large and mid-cap mutual funds and direct equity will help in growing money manifold.

Also give provision for a contingency fund. This fund could be utilized to meet unforeseen expenses like a lay off, illness or a business downtime; a lesson which Covid-19 taught us.

Ideally, the corpus should have funds equivalent to one year’s expenses. In other words, even if you don’t have job for one year, you should be able to run the show. The creation of a contingency fund should top your priority list this year.

Single Working Parent

Single parenting is a tough job and it is tougher if one is financially insecure. The main concern for a single parent is the education of their children.

To secure your children’s education, it is advisable to buy a dedicated 20-year children’s insurance plan which can ensure a hefty cover. You can breathe easy once your child’s education is ensured. It is also better to take the SIP route to systematically save money for the future.

Also hop into a retirement plan this year, if you haven’t done so. A worthwhile retirement plan will ensure a fixed amount as pension in your autumn days. One thing that should be borne in mind is that choose plan that suits you, don’t go by what your friends and relatives do.

The decisions on investments should be made keeping the immediate priorities in mind such as children’s education, repayment of loans, and constant flow of income, among others.

For The Senior Executive:

If you are a senior executive who boasts of a hefty pay cheque and dares to take the rough ride, a note of caution this New Yearwill augur well for you.

It is true that more risk means more gain. But a crisis like that in 2020 can strike any moment that could be one’s downfall. So in 2021, make a resolve to go in for calculated diversification whereby the risks are spread. A good blend of equity and debt in the form of balanced funds will be a good option. The hybrid funds will ensure that risks are optimally balanced.

Also make sure that your income is routed to fixed income investments such as a solid fixed deposit or constructive SIP. These will help you save money and earn returns with minimal risk.

Some Takeaways this New Year

  • Students should build a corpus to repay education loan by working part-time.
  • Single and working people should weigh the options of an insurance cover and also reap the benefits of using credit cards.
  • Married and working people should have a combination of mutual funds, equity, debt and insurance under their belt.
  • Divorced and working people with children should go in for a specific child insurance plan.
  • High-earning senior executives should take the slow lane and opt for fixed income investments and balanced funds.

Happy Investing in 2021!