There isn’t long to go until the New Year. A good time to check up on your finances is now, because things can change quickly. Let’s make some important financial goals for 2022 so that we can have a good financial life then.
Understand how the pandemic will affect you and make decisions about how to deal with it, then do so.
If you want to make a good plan, you should think about what you did in the past. Rishabh Parakh, who is a chartered accountant and the founder of NRP Capitals, says that you should spend 75% of your time looking at the pandemic years 2020 and 2021.
You need to figure out if your expenses went up and if you met your financial goals. The COVID-19 pandemic could affect your income and expenses, so think about how it might affect you. This will help you set realistic financial goals for the new year that you can reach, so you can make them.
Consolidate your portfolio.
In the last two years, we bought a lot of stocks and a lot of cryptocurrencies. There were a lot of new fund offerings (NFOs) and first public offerings (IPOs) in 2021. A financial expert, money mentor, and the founder of Finsafe India says that you should clean up your portfolio to make it easier to find what you need. “Simplify your finances and review your portfolio often,” she tells us. She encourages us to sell assets we don’t understand and may have bought because everyone else bought them, too. And you should cut down on the number of things you own in your portfolio, too. When it comes time to pay taxes at the end of the year, she says that having a simple investment portfolio also makes it easier for her.
People who want to invest in new thematic offerings from AMCs or IPOs that aren’t cheap should talk to their financial advisor first. If you want to make a lot of money quickly, don’t follow the herd blindly, says Paddy Raghavan, a co-founder of Multiple.
There are a lot of people who think that investing in cryptocurrencies will become more common in 2022. “You should keep an eye on this news and invest only up to 5% of your overall investment portfolio in cryptocurrencies,” says Parakh. It’s also important for retail investors to only invest the money they can afford to lose, says the author. If you want to invest in cryptocurrencies, you should not play with your money like that.
Health insurance is a good idea.
Still, COVID-19 is around us. Group insurance from their employer has been the main source of health insurance for most people. They need to check to see if their health insurance is still enough for their family and other people they care about, says Raj Khosla, the founder and CEO of MyMoneyMantra. In the same way, check to see if you have enough term insurance to cover you in the event of a pandemic, as well.
In case of an emergency, you should have at least three months’ worth of cash on hand, either in fixed deposits or in cash, to cover the costs.
It’s important to keep an eye on your investments and use any extra money you have. You also need to check your credit report and figure out how much money you have left. To keep your money safe, set aside a day in your schedule just for your money box. As Parakh says, “Write down everything you need to do with money in a diary or an Excel spreadsheet.” This way, you will be more focused and the chances that your money box will be forgotten go down.
A close look can help find places where things aren’t right. Make sure you read your bank and credit card statements once a month to get a better sense of what they say. Spend some time figuring out how much money you spend and how much money your bank charges. It’s best to go to your bank if something isn’t right. Aparna Ramachandra, the founder of rectifycredit.com, says that. Exercise like this will help you become a more knowledgeable person and a better money manager.
From January on, make a promise to save money for big-ticket items. In Raghavan’s words: “Plan ahead and avoid making hasty decisions to buy them on credit,”
All of these big-ticket items, like holidays, insurance premiums, school fees, gadgets, home decor, and so on, should be planned in advance “so that you don’t have to pay for them with personal loans later,” Raghavan says. Many people use Buy Now, Pay Later (BNPL) schemes when they shop and Holiday Now, Pay Later schemes when they go on vacation. Make a promise not to do that this year.
A loan moratorium in 2020 might have allowed you to pay off some of this debt now that you have more money. Make a goal to pay off this debt without having to change your other financial goals.
There are a lot of home loan borrowers who are still paying off their loans at the old interest rates, which were around 10.5 per cent. Now, they can get a loan for less than 7 per cent interest. During the first few months of 2022, make a promise to either get a lower home loan rate from your current lender or switch lenders.
In the year 2021, the banks were trying to get balance transfer customers, and that’s what they’re going to try to do in the year 2022, too.” Atul Monga, the Co-founder and CEO of BASIC Home Loan, says that they are coming up with new ways to get customers with good credit from other banks to come to their own bank. From December 28, 2021 to January 26, 2022, Bajaj Housing Finance cut home loan interest rates (including balance transfers) to 6.65 percent per year. This was part of a new festive offer.
It doesn’t make sense to put off home loan refinancing if the new home loan rates are about 25-50 basis points lower than your current rate. Mortgage world founder Vipul Patel says that even if the difference is only 25 to 35 basis points, you should still do the math and switch even if it’s only a few cents. Anyone who thinks about the long term should think about anything above 25 basis points as good business sense. In that case, it’s not worth it to change your loan.
Improve your credit score and check it once a year to make sure it’s up to par.
Check your credit report and credit score at least once a year to make sure everything is okay. Ramachandra says that if something is wrong with your credit report, you should talk to your bank or lender about it. If you have multiple loans with three to five months of payments left, see if you can pay them off and close the accounts. To improve your credit score, do this. You will be able to get a bigger loan at a better rate if you do this. People with a credit score of 750 or more get the best terms on their loans and credit cards.