How to Manage your Finances in the Financial Year 2023-24

Financial planning at the beginning of the financial year is a crucial step that can take you a long way in managing your finances throughout the financial year. You can have a clear idea of your financial situation and based on it, you can prioritize and achieve your goals and maintain stability even in tough times. Let us find out some of the most important factors that can help you manage your finances better in FY 2023-24.

• Know your Credit Standing and Maintain a Healthy Credit Score

It is also advisable to check your credit score and credit report regularly and try and maintain a healthy credit score. Most credit bureaus charge you a fee if you intend to get credit score regularly. You can check your credit score on a monthly basis at finance aggregator platforms such as Paisabazaar and stay updated about any deviation in your credit score.

Paying your credit card bills and EMIs is one of the most crucial things that can help you have a good credit standing, reduce your overall debt burden and avail more credit easily in case the need arises. Also, checking your credit report at regular intervals can help you find out any discrepancies in payments or reporting and take corrective action on time.

Suggested Read: A Guide on How to Maintain a Good Credit Score in India

• Monitor Expenses and Have a Budget

In order to utilize your funds efficiently, try and analyze where you stand in terms of income and expenses. Know your essential and non-essential expenses, try and eliminate non-essential expenses and set up a budget. Also, try and pay off your debt obligations first, particularly high-interest debts to reduce your overall debt burden. This can in turn help you save more and invest the same in wealth-building investment opportunities. Moreover, when setting up a budget, do remember to factor in inflation and put aside funds for incidentals and emergencies.

• Plan Investments and Start at an Early Age

Once you decide upon a budget, plan your investments according to your risk appetite and investment capability. Moreover, start investing at an early age to get the maximum benefits of compounding. Try and incorporate both life and health insurance in your financial plan as it will result in wealth generation as well as offer protection. It will also help avoid a dent in your savings in case of unforeseen events.

Remember to review and monitor your investments regularly and reduce or increase investments as per their performance. Ensure that you consider inflation when making investments and choose those which help your funds grow faster than inflation so that you can meet your financial goals. Try and invest in instruments that also help you build a corpus for your retirement and have a financially secure future.

• Smart Planning of Taxes

Smartly planning your taxes early on in the financial year can help avoid hurried decisions and unnecessary tax deductions. For instance, for FY 2023-24, individuals whose income does not exceed Rs. 7 lakh will not have to pay income tax in case they opt for the new tax regime. However, in case your income exceeds the taxable bracket it is advisable to plan and make investments considering the rebates and exemptions available across different investment instruments.

For example, if you have a daughter below the age of 11, you could open a SukanyaSamriddhiYojana account for her which will not only help you save tax but also offer higher returns than most other small savings schemes or maybe invest in NPS which offers an additional deduction of Rs. 50,000 under Section 80CCD (1B) over and above the Rs. 1.5 lakh deduction available under Section 80C.

Moreover, you can spread these investments since you have a complete year to invest the amount. You must also remember to keep in mind your current financial situation, long-term and short-term life goals, your credit portfolio and the prevalent macroeconomic conditions when you begin tax planning for the financial year.

Even though the points mentioned above may look like basics of personal finance, but if we adhere to these pointers, we can not only manage our credit properly but also have significant savings by the end of the year 2023-24.