Money lessons to keep your finances healthy through the year

Managing your money in January will set the trend for rest of the year, says Adhil Shetty.

Illustration: Dominic Xavier/Rediff.com

The financial decisions you take at the start of the year can decide how you are placed financially for rest of the year.

So in January 2018, take prompt and effective decisions to keep your finances sorted through the year.

We tell you some simple rules that will ensure you stay financially healthy in 2018.

Plan your tax

The New Year is here, but the financial year is nearing its end and soon you’ll be required to file your Income Tax Return (ITR) by the end of March.

Last minute difficulties are common in figuring out investment options for saving taxes.

So start your investment well in advance, and assess your tax saving requirements in the month of January itself.

Select the appropriate tax saving investment instruments now and do not wait till the last minute to invest money for saving tax.

Also, be ready with all documents that you may require for filing your tax because the government starting from AY 2018-19 is going to penalise those who delay their tax filing beyond the stipulated deadline.

Don’t overuse your credit card

In the month of January people are normally in a celebration mood and often indulge in spending money by using their credit card, while ignoring the impact on their personal finance.

When using the debt instrument for an impulsive buying, people often forget that in future they would be required to repay it.

So avoid impulsive purchases and avoid exhausting your credit card limit, which can also impact your credit score in future if debts are not paid on time.

Plan your holidays

People love to spend time on holidays and especially in the month of January.

But owing to a huge demand, everything becomes costlier such as hotel rooms, flight tickets, food, etc.

So, you may end up spending a much higher amount if you travel in the month of January in comparison to other months.

Try avoiding this and instead plan your holiday in advance when there is not much rush and you can get good deals.

Maintain expense records

Keeping the record of all your expenses can help you to analyse them later and can be used in future to cut down unnecessary expenditure.

In January, most of us tend to spend money on several unnecessary and unexpected things.

Keep a record of such expenses to keep tab on your spending habits and plan for rest of the year.

Capitalise on discounts

January is the month when Winter Sale is still on in most retail stores.

Capitalise on these discounts smartly to save money in comparison to the normal shopping period.

So, if you are looking to buy something later in the year, plan to buy it during the offer period to save money and stay financially healthy throughout the year.

Clear your debts on time

If you clear your debts in time and service the EMIs on time, then it can help you to keep your credit score in good health and save you from penalties.

If you have surplus funds in hand, use it to clear pending debts in part or full as it will reduce your liability to an extent.

Closing a debt in advance will keep you financially strong.

Increase your savings

January is the best time to increase the amount you save every month.

Usually, companies confirm its employees 2-3 months in advance about how much increment they may get from the next financial year.

Once extra income starts ringing in, you may indulge in unnecessary spending, so it is better that you start saving more money from January itself and divert the increased income later on towards saving.

Clear your pending bills

Before you start spending your money this New Year, you must clear all your lingering bills and outstanding payments.

You may not have paid property tax, electricity bill, telephone bill or small debts taken from the friend or relatives.

Clear all such pending bills before you spend it elsewhere and start the year fresh.

Managing your money in January will set the trend for rest of the year, so cautiously and smartly decide your course of action to keep your finances healthy throughout the year.

Adhil Shetty is CEO of Bankbazaar

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