A Financial Calendar For 2019

You made resolutions to hit the gym more often. Check! Cut fatty food. Check! More veggies. Check! Doing better at work. Check! Spending more time with loved ones. Check! Reduced your debt burden. Wait! That doesn’t seem to be on your list. Don’t your resolutions have anything to do with your investments and loans? Then, all your other resolutions might remain just that – resolutions!

Additional Reading: 9 Financial Resolutions For 2019

It is important that you fix your financial calendar before setting up for your calendar for other events.  Don’t know how to go about it? Read on to find out all about setting up a financial calendar.

Step 1: List your financial goals for 2019

Is this the year you want to start saving for a new car? Or is it the year you want to finish paying your Home Loan? Start by assessing your financial situation. This will help you identify which goals are near, which are further away and which ones are crying for your attention.

Identify all your financial goals and list them in the order of priority. The ones that are more important such as buying a home, should be on top as they need more planning. Once you have your goals in place, create a savings plan for each of them.

Additional Reading: The Dos and Don’ts For Home Loan Prepayment

Step 2: Pay off expensive loans

Every year you should have a plan in place to pay off your most expensive debts. This will help you save a ton on the interest you might have to otherwise pay for that loan. You can choose to start small. Credit Card balances are the most expensive ones as interest is often charged at more than 20%. Set aside an amount every month and increase it as you go along.

If you aren’t able to pay off big loans, try to at least prepay some of it so that your debt burden reduces. Don’t understand? Let us help you. Suppose you have a 20-year loan of Rs. 30,00,000 for which you are paying interest at 12% every year. You decide to prepay Rs. 1,00,000 of the loan after 4 years. How much will you save in interest? A good Rs. 5.17 lakhs! Yes. The benefits of prepaying your loan are huge. So, create a plan for paying back your most expensive loans.

You can save money for your needs after keeping aside money for paying off your debts. This will help you reduce your liabilities, leading to a stress-free financial life.

Step 3: Create a savings plan

How are you going to save for that luxury sedan that you so need? Or that exotic vacation that you wanted to take last year? You must start by writing down the amount you might need to meet each goal. Then, see how long you have to reach each goal. This will help you calculate how much you need to save every month for meeting each goal. The longer the tenure, the more risks you can take with your money. Here, we are not referring to risks such as those associated with gambling. We are talking about market risks associated with investments such as stocks.

Equities and equity Mutual Funds tend to beat inflation over the long run. So, choose equities if your goals are more than 5 years away. Shorter term goals should be fixed income oriented. This means you must invest in more of Fixed Deposits, bonds and debt Mutual Funds.

You can consider Systematic Investment Plan (SIP) in Mutual Funds if your goal is more than 3 years away. Let’s take an example to understand this better. Suppose you want to buy a car worth Rs. 10 lakhs, 5 years from now. You have Rs. 2 lakhs in hand. In order to meet your goal, you need to invest Rs. 9,497 per month, assuming an inflation of 6% and an investment return of 10%. Making this calculation for each of your goals will help you find out how much you need to set aside each month.

Additional Reading: Best Equity Mutual Funds To Buy In 2019

Step 4: Create a financial calendar

Now you can take your yearly planner and jot down your plan for each of the months. For each month, put down the amount you might need to set aside. Apart from these, you can put in certain events, their estimated costs and how you intend to meet them.

For example, suppose you have your wedding anniversary in the month of June and you want to surprise your spouse with something special worth Rs. 1 lakh. You need to either save up or assess how you are going to meet those expenses. Put this in your calendar.

Worried about your spouse finding out? Use codes or simply say it’s for tax purposes! Ensure that you give some thought to the whole activity and also cover all possible events.

Unforeseen emergency? You must have your emergency fund in place so that your savings plan doesn’t go haywire. Don’t forget to set up reminders for all your due dates. This will include your Credit Card bills, loan EMIs as well as insurance payments. The best way will be to set up auto debit for known bills so that you don’t forget them. Remember, every missed payment will affect your Credit Score.

Here’s a sample of how your financial calendar should look like.

January:

• Assess your financial situation
• List your goals
• Plan for paying off debt
• Plan for saving for your goals
• Get your tax documents ready so that you can give it to your employer
• Set reminders for payments such as EMI and premiums or set up auto debit for all your payments.

February:

• Claim reimbursements from your employer for the last financial year. This could include medical reimbursement and Leave Travel Allowance.
• Read about the Union Budget and note down the changes in taxation.

March:

• Avoid taking loans to make investments for tax savings.
• Use only the funds set aside last year for summer vacation or allocate some from this year, prudently.

April:

• Invest your bonus wisely. Ideally you should use it to pay off your loans.
• Set aside money for your kid’s school fees for the next academic year.
• Look for an Education Loan if your kid is going to college and you are short of funds.

May:

• Try to save on travel expenses when you go on your summer vacation. Using an airline or travel Credit Card will help.
• Set a budget for your vacation and stick to it.
• Assess your assets such as real estate and gold. Check if you need to pay taxes on them.

June:

• Start your tax planning for this financial year. You can allocate funds for the same every month if a lumpsum is not possible.
• Look at your insurance policies and see if any of them will be maturing soon.
• Tax investments for Rs. 1 lakh (the surprise gift!) – use part of the dividend income from stocks and interest from Fixed Deposits.

July:

• Time to file your taxes for the last financial year. Ensure you do it well before July 31^st to avoid last minute errors.
• Review your portfolio and see if you need to rebalance some of your asset classes.

August:

• Buy clothes and gifts from off-season sales for the upcoming festive season.
• Check gold prices before buying gold ahead of the festive season.

September:

• Make a budget for the festive season and stick to it.
• Use a shopping Credit Card to save money if you are planning to do some last minute shopping.

October:

• The festive season is starting and it is time to ensure that you don’t overspend.
• If you are planning a vacation in December, set up your finances for the same.

November:

• Cut down your expenses so that you can have more money for your vacation next month.
• Check whether your tax savings are on track and you have all the documents you need.

December:

• It’s vacation time! You can still save money on your flight tickets if you use an airline Credit Card.
• Time to check whether all your goals are on track.
• Take stock of all the resolutions that you made at the start of 2019.

All set? We hope you have a great year, financially and otherwise! And when you want a financial product, ensure you compare across lenders to get the best rates and terms. This can save you tons of time and money. Don’t wait!