As 2020 draws to a close, there is glimmer of hope all around. The Indian economy’s performance in the July-September period, though not yet great, is far better than the previous quarter. Every passing day has some more good news with respect to the vaccines for Covid-19. With all this, we are all hopeful that 2021 will be better than 2020. And 2020 would be soon forgotten…
While that still needs to be seen, what is also important is that we remain prepared on our end. As finances play a critical role in almost all spheres of our lives, it is imperative that we are on top of our financial planning game.
So, here we bring to you a very small checklist to re-evaluate your financial plan for the new year.
1. Adequate Insurance Cover
The year 2020 made it very clear to all of us that it is extremely crucial to have adequate insurance in place for ourselves and our families. This is true for both health, life and other insurances.
Over time, the cost of healthcare in the country is going up, and so is the overall cost of lifestyle. What seemed adequate coverage 3-4 years back, might not be adequate today. So, if you do not have a satisfactory health wellness coverage, do introspect and take action.
If you have taken on additional liabilities in the recent past like a big home loan, then it becomes doubly important to enhance your life insurance cover accordingly.
Other than life and health insurance, ensure that your important assets like your car or your home have the required insurance, depending upon factors like climatic conditions of your place of residence or the places you usually drive to for work.
2. Invest idle money – wisely
This one is slightly tricky.
What happens is that we have our fixed SIPs every month. However, from time to time, there is some surplus inflow of money either as a bonus or a gift, and it keeps lying either at your home in cash, or in your bank account, earning below-par returns. This is also true when you get a raise and similar thing happens on a monthly basis.
The tricky part is you suddenly realise that you have this surplus and decide to invest it as a lump sum. At this stage, it becomes important to be careful where you are putting this money.
For someone, this money could be best used for pre-paying a loan, for someone else, keeping it idle for a few months could be best as they have a financial goal pretty close.
So, the answer will be different for each individual; hence, do not look for one-size-fits-all solutions for this one.
3. Update your documentation
This might sound to be the most mundane (and boring!) of things, and in some cases daunting too. Over the years, many people end up changing their place of residence or getting married. There could also be other changes in people’s lives.
Accordingly, it becomes important to have all your KYC details up to date.
Very importantly, having a basic Will in place is a good practice, though we are aware many people shy away from a conversation on this point. But trust us, a mishap comes unannounced and the family is left in a state of panic when they find that the documentation is scattered all around. We have also seen family’s dirty linen being washed in full public view, just because there was no Will in place as people thought it to be too trivial a thing or that it can always be done later – ‘I’m not going anywhere any time soon’.
This list is, of course, not exhaustive.
We have also assumed that all our readers are already doing the basic things right, hence the list above is of slightly sophisticated nature. For beginners, we will have another new-year checklist soon.