Are you tracking your financial status? Do you believe you can save more and do better? But you think you can do it tomorrow and there is lot of time for it, but time flies. Take an assessment of your financial status. The routine evaluation would help you check that you are on track to achieve your financial goals. Here are seven practical steps for you to become financially fit.
1. Understand what are assets and liabilities
To know your financial status, you must know your net worth, and that is your assets minus your liabilities. Assets include what you own, and liabilities include what you owe. Keep calculating your annual net worth to get the picture clear.
2. What are your financial goals?
There can be short, medium or long-term goals.
First, identify your goals and then quantify them. Make sure that you have set SMART financial goals, i.e., Specific, Measurable, Actionable, Realistic, and Time-bound. You should be specific and honest while deciding your goals.
3. Check your Credit Report
If you are planning a big purchase, then you should check your credit report at least once a year and before big purchases as recommended by the Consumer Financial Protection Bureau (CFPB). You can find all your credit account(s) status and bill paying history in your credit report. It is critical for getting your loans sanctioned at the best possible rates.
4. Did you name your beneficiaries?
Any investment you make like a retirement account or an insurance policy, name your beneficiary- a person who will collect the amount in the event of your death. Your spouse is your beneficiary by default, but you may elect others as well.
5. Manage taxes better
Do not forget to calculate your income tax and pay it on time.
If you are salaried, your employer deducts TDS from your pay-cheque and in case you are self-employed, you have to pay an estimated tax quarterly. Be updated and know the tax you need to pay.
6. Check if your investments are aligned
Always make sure that selection of all your investments matches your financial goals.
Check every quarter that your goals and investments align. Your goals could be saving for retirements, saving for your kids education, saving for an expensive holidays. Based on your goals you have to make a choice about investments, like growth assets, low risk assets or may be high risk and high growth investments.
You can start investing online. Read this post
7. Determine if you have the right insurance or not
Insurance is of varied types. Do assess that you have the right kind of insurance with appropriate coverage money. Seek help from your insurance agent to make an informed decision. Read our latest article on insurance here