We are now well into the new financial year. Most of us would have now got their salaries revised, business plans worked out and bonuses received. It is now then time for revisiting your own personal finances. The start of the year is the best time to do a thorough analysis and reworking our financial plans. In this article, we will take a look at the things that you need to do in order to reset all your finances and plans for the new year.

Assess Your Finances:
As an important exercise, we have to work out all our finances in the new year. Things like school fees, salary to your driver, society dues, fees to your CA, etc. would have all changed in addition to changes in your and your spouse's salary. It is thus high time that you sketch out the estimated monthly cash inflow and cash outflow to know your budget. It is also time to take stock of your investments, especially those lying in bank and small savings. Try and arrive of a proper balance sheet of all your assets and liabilities at this moment. Keeping ready with the cash-flows and your balance sheet would give the knowledge of your net-worth and your financial capabilities for making the upcoming decisions.

Make a Budget:
After an assessment of your financial situation, it is time to take the first step of reconstructing your finances by planning your budget. Most of us do not have fixed budgets defined for our expenses and do not consider them as important. However, this is far from truth. Having a budget not only helps you in better knowing and planning your finances, it also helps you to save more and control the unwanted expenses. At a more philosophical level, it helps us become more organised and thoughtful in spending our money. Put together all these things, repeated over the years, can make a considerable impact on your wealth. One may not realise this impact today but it can only be experienced when applied in its' true sense over time.

Review your financial plan:
In layman terms, financial plan is nothing but a statement of your financial goals and the investment plans to achieve them. It is mandatory that you prepare a financial plan for yourself at the first possible instance with the help of the experts. And if you already have one, its' time to revisit the same, given the financial changes that may have already happened. You may consider making the following changes in your plans...

Adding of any new financial goals Removing any financial goals which are no longer needed Adjusting the financial goals by changing the amount required and/or the period remaining Accounting and allocating the existing investments already made towards goals Lastly, making changes in the planned investments towards achieving different goals

Though these exercises are not simple and assistance may be needed to do them, a basic level of reworking of finances is not an impossible task. Engaging yourself in this exercise will also help you to understand your financial plan better and make you more committed to your plans.

Rebalance your Portfolio:
Once your financial plans are reworked, as a next step, you would be required to rebalance and/or make changes in your investment plans. This would mean understanding your present asset allocation (share of different asset classes like equity, debt, cash, etc. in the portfolio) and changing same by shifting money and/or making new investments. It is also recommended that you make changes (read increase) in your monthly investments (SIPs) with the given increase in your inflows. Your advisors would help you effectively rebalance your portfolio in accordance with your financial plans and your risk appetite.

Review your insurance policies:
This is something we don't often do. As a matter of fact, insurance is not a one time thing but an evolving need. With changes in your finances, family and your life stages, your insurance needs would also change and it is important that we reflect these changes in the insurance cover that we take. Note here that while a typical life insurance policy would be for a long-term period, general insurance policies are generally of a one year period. Thus, your personal accident, critical illness, health insurance, motor insurance and home insurance, all would be up for renewal /reconsideration. At this moment you would do well to assess all your and your family member's insurance needs – both in terms of the risks and the amount of coverage, and make the right decisions to comprehensively account for them.

Plan for next year's tax savings:
After planning for your budget, financial goals, insurance policies and portfolio, it is now time for the tax planning to be done. Your tax planning would consider your assessment of your tax slabs, the estimated income in different heads and the amount of tax savings already committed. These committed tax savings would be related to your provident fund, insurance policies, home loan, etc. After considering these expenses, you can arrive at some figure that you may need to save for tax saving purpose. Knowing this figure at the year beginning would be a great thing to know since now you can smartly plan your savings in the year ahead.

Implementing Your Plans:
After all the planning, comes the crucial implementation part. Doing this without any procrastination or delay would be no less than some feat. To ensure this, let us put on paper all the decisions that we have taken till now and also put a target date to these decisions. Remember that with every day of delay, there is some monetary cost attached to it which you cannot see. Also there is the risk of your plan itself loosing relevance with you forgetting and/or later avoiding any commitments. Your financial plans are like packed foods that come with a manufacturing and an expiry date. It is best for use (read implementation) only for a limited time and a delayed plan is like a stale plan which will need to be revised later.

Get ready to file Income Tax returns:
After completion of the financial year, it is important that you file your returns, if required, within the due date. Just to point out, there is no restriction on filling returns before this date. We can thus file the returns, properly and at our leisure, while avoiding the last minute rush. Other than you, there will be one more person who would be happy when you do this – your accountant.

Conclusion:
Well, there is a very thin dividing line between financial well-being and financial stress. The reason it is thin is that we can easily walk away and wander from the right path. If you are not on top of your finances and are doing things, making financial decisions without proper awareness of your goals and limits, you are most likely to fall to the wrong side of that dividing line. And as Suze Orman once said “The only way you will ever permanently take control of your financial life is to dig deep and fix the root problem.” The beginning of the financial year is an opportunity for you to get back onto this thin line and get in control of your finances. Let us not miss this opportunity. Its just an first quarter completed.