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Financial Checklist To Kick Start 2020 On Strong Foundation

So not too much financial jargon and no intimidating questions asked, here is the “must-have” financial checklist for 2020.

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A few days into the New Year and the most sought after resolutions are inadvertently going to be around, Health and Wealth! So for the folks out there who almost hate finance and run away from anything related to numbers or planning for the future, let us give you a cheat sheet to kick start this year with a strong foundation. So not too much financial jargon and no intimidating questions asked, here is the “must-have” financial checklist for 2020.

1) Life Insurance- On average, a person thinks that insurance is an additional unnecessary expense. For all those who think like that need to really sit down and think about the expenditure in case of loss of the asset. The financial difficulties one will leave their family into if adequate life insurance is not taken can have a dire affect on their lifestyle. Go for an online Term Plan which is a simple life Insurance. Life Insurance should not be mistaken to be an investment. Life Insurance premiums can help to save taxes under Section 80C.

2) PPF- Public Provident Fund is a great way to make secured investments that give a guaranteed 7.9% return (as on today). One saves taxes on the deposits (till 1.5 lakhs under section 80C), the interest is tax-free and the withdrawals are tax-free too. If a long lock-in period is alright then PPF is a safe haven product. 

3) Emergency Funds- No matter what one does for a living, at least six months worth expenditures should be saved in a handy, liquid option which is not volatile in nature. The best options are Liquid Funds. These debt mutual funds are least volatile amongst all corporate debt funds. Also, they can be slightly more tax-efficient than fixed Deposits if held for at least three years. Liquid Funds are for those urgent needs for which money can be planned in one day’s time.

4) Equity for the long term- If the goals are at least 7 to 10 years away, then real wealth can be created only through Equity or real Estate as these asset classes can beat the actual and lifestyle inflation. Since real estate is difficult to manage and needs large sums of money, Equity makes a good choice too. Equity or company shares must be purchased through mutual funds, as the fund managers ability to pick the right companies at the right time can be fruitful in realizing returns. For the ones who do not have the time to select the right mutual funds, they may just start with investing in the benchmark indices like NIFTY50 or SENSEX via Exchange Traded Funds. Start early and enjoy compounding. 

5) Beware of credit- Credit cards and easy instant loans are getting easier to get day by day, one must be cautious about getting into a debt trap. Staying away from personal debt can really help but if you must then paying back on time can save you from huge expenses and credit rating downgrades.

By just starting with these simple five steps the foundation for a great financial plan would have been laid. Although hiring a financial planner should be a must for everyone as they can be the ‘Sherpa’ to help you climb the financial mountains without stress as they know that terrain better, but the onus lies on the investor to begin that journey and remain financially aware throughout. With true financial independence, one can pursue their passion in life. Cheers to a purposeful  2020!

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.


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Tanvi Goyal

The author is Founder & CEO Wealth Aware

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