Smart financial checkups

Reviewing your budget

The first step is to review your budget. This will assist you in monitoring what you earn, where you spend your money, and how much you are managing to save. As expenses increase and income changes over time, reviewing your budget on a monthly or at least on a quarterly basis would help to ensure that you are spending your money wisely.

How to review your budget?

When reviewing your budget, you should start by listing down all the sources of your income such as your job, any side hustles or freelancing work, rent income or any other sources. This should be followed by writing down all the expected expenses. This includes bills like rent, groceries, utilities, transportation, insurance, and entertainment. Categorize your spending—what are essentials, non-essentials—and audit if any expenses have gone up or down. 

For example, did you start a gym membership or change your phone plan? Decide if you can reduce any non-essential spending. Maybe skip dining out two nights a week or find cheaper internet options. Try to save at least 20% of your income if possible. You can put this towards an emergency fund, debt repayment, or retirement savings. A clear budget helps you spot where money was wasted and where you could save more. It helps you stay on target for bigger goals like buying a home or travelling abroad.

Group purchases into categories such as fixed expenses, variable expenses, and occasional expenses:

• Costs that generally don't change month-to-month, like rent, mortgage, and car payments
• Flexible spending that changes monthly, like groceries, gas, dining out, and entertainment
• Payments that don't occur every month, such as annual subscriptions, car maintenance, or gifts. Divide these costs by 12 and set the money aside each month

Some banks and financial apps automatically categorise your spending, which can simplify the process.

How to boost your retirement planning?

Retirement planning starts by assessing your long-term financial goals and ability to take risks, and then taking the necessary steps to reach those goals by the time you retire. You can start to plan for your retirement during your working years, but the earlier you start, the better. Retirement planning includes identifying income sources, adding up expenses, starting to save in a disciplined manner, and managing assets. By estimating your future cash flows, you can understand whether you can achieve your retirement planning or not. Retirement planning shouldn’t be static, and you should adapt by making changes to your retirement plan as needed.

Saving for retirement might seem far away, but the earlier you start and the more consistent you are, the easier your life will be. There are a few government retirement plans you can opt for such as National Pension System (NPS), Atal Pension Yojana (APY), Pradhan Mantri Shram Yogi Maandhan (PMSYM), and Senior Citizen Savings Scheme.

Update your insurance coverage

Life changes like marriage, kids, or home purchases mean your insurance needs also change. Reviewing your insurance once a year helps make sure you have the right coverage at the right price.

Health insurance: Make sure your health insurance covers all the health-related issues that may occur in the future. Check if your plan still fits your medical needs, especially if your family size or health needs change.

Life insurance: If you have major life changes, review your coverage amount to protect loved ones if something happens to you.

Homeowners or renters’ insurance: Update your policy if you buy new valuables or renovate your home.

Car insurance: If you purchased a really expensive car and met with an accident or your car got damaged, car insurance will help you recover the amount and the damages caused to the car.

Disability insurance: You should consider adding or increasing the coverage to replace your income in case of illness or injury that may hamper your ability to work.

Before making these changes, it is best to consult your insurance agent or your company about discounts or options to bundle any of the above insurance schemes. You should also review any deductibles and/or premium costs to make sure you do not overpay for the insurance coverages.

Conclusion

Such financial checkups every year take only a few hours but it can save you a lot of money over the long-term. It sets you up for a more secure and comfortable future and helps you avoid surprises. Rebalance your investments regularly to keep your risk in line with your goals. Keep your insurance coverage up to date to protect yourself and your family. Set a reminder for this financial review every year, maybe with the new year or your birthday. With regular care, your money will work harder and smarter for you.