Your Money: Were you able to meet your financial goals this year?
Updated: Nov 24, 2020 1:19 AM
Many have experienced income loss, salary reduction, or job loss this year due to the Covid-19 pandemic, and you should assess its impact on your critical financial targets and take effective steps to bounce back if required.
Your future expense expectation could have also changed in sync with the changing financial environment ; therefore, take a look at your existing life insurance cover and increase it adequately.
By Adhil Shetty
We’re reaching the end of a rather unexpected year, and it’s time to ask yourself how you have fared financially to meet your annual targets this year. Many have experienced income loss, salary reduction, or job loss this year due to the Covid-19 pandemic, and you should assess its impact on your critical financial targets and take effective steps to bounce back if required. We have listed a few crucial financial targets which you must pay attention to now.
Is your emergency fund adequate? If you were forced to dig into your emergency fund in the last few months, and now if your finances have started stabilising, you must replenish the fund at the earliest as you can never be sure that there won’t be any more uncertainties in the near future. And if you still don’t have an emergency fund, there’s no time to lose to build one worth at least six months of your expenses.
How’s your insurance cover? Health and life risks have increased manifold due to the pandemic, and considering the skyrocketing hospitalisation costs, you must re-evaluate your existing health insurance cover. Have a medical plan worth at least `5-7 lakh if you stay in a metro city. You should also consider further increasing your protection level by going for an affordable top-up or super top-up plan based on your requirements.
Now, if you have taken a new loan, availed loan moratorium, or have opted for loan restructuring, your financial obligations too may have changed. Your future expense expectation could have also changed in sync with the changing financial environment ; therefore, take a look at your existing life insurance cover and increase it adequately.
Have you fulfilled debt obligations? If cash-flow issues forced you to opt for the six months’ moratorium or loan restructuring plans, you must realise that these could increase your overall loan burden. As such, you must get absolute clarity about the extra financial load of availing these options and build a plan to repay the dues in full on time to avoid further complications. In case of home loans, you should ideally aim to raise the required funds to make adequate pre payments so that you’re able to become debt-free according to your initial plan.
Have you met your tax-saving goals? The pandemic started before the start of the financial year 2020-21; therefore, many investors have not yet taken their tax-saving initiatives. Despite the unexpected situation, stay ready with your tax-saving plan and accomplish it at regular intervals.
For example, you may invest in tax-saving schemes every month or every quarter. Delaying tax-saving initiatives can push you into a last-minute rush where you could make costly mistakes. You may also adjust your tax-saving investment size as per your income till now and the income that you expect to earn in the remaining months before the end of the current financial year.
Are your investments on track? Disciplined and consistent investments are keys to timely achieving your financial goals. There is no doubt that the pandemic has made it difficult for many people to focus on their investment goals, but completely shutting down your investments could be risky too. Further delay in restarting your investments could deter you from achieving your financial goals. If you have skipped too many investments, it’s time to assess the situation and make a plan to recoup quickly.