To remain financially sound is everyone’s top priority. Moreover, being financially sound gives a person a sense of security for his or her future.
In this blog, we will tell in detail how can you remain financially sound in 2022!
Tips to remain financially sound
1. Start with a budget
To remain financially sound, the first and foremost step is to start with a budget. Creating a budget can help you to evaluate your expenses as well as savings. In addition to this, you can also mention your future goals wrt expenses and savings that may happen in future. By doing this, you will be able to set a balance between your existing and future financial conditions.
2. Identify financial goals
There can be various financial goals like investments in fixed deposits, life insurance, health insurance and other tax-saving schemes. Identifying these goals can also help you in remaining financially sound. However, one should not make financial goals for the sake of it but must also make sure that the goals are realistic.
Also Read: Best Ways to Save Taxes in 2022
3. Start investing to remain financially sound
Planning your retirement is yet another the most important phase of life to remain financially sound. One should save a significant part of his present income for his retirement. For doing this, one may make use of the FIRE method which stands for Financial Independence Retire Early. Under this method, one can start by saving 50-70% of his income and investing these savings wisely to remain financially sound
5. Plan your taxes
You cannot remain financially sound without planning your taxes. The tax reduces your actual income. Therefore, you must take appropriate steps to plan and save your taxes. You must see which tax regime is suitable to you as per your income, where all investments can be made to save taxes, etc.
Also Read: Income Tax Slabs for FY 2022-23
6. Build emergency savings fund
As a part of financial planning, you also need to build some saving which can be used in case of emergency. These emergencies, for instances can be car repairs, replacement of a major home appliance, medical treatment etc. To remain secure & financially sound, you should consider putting aside an amount equal to your monthly expenses for 9 to 12 months for emergencies.
7. Take adequate insurance cover
Creating an emergency fund is not enough and therefore, you must consider taking an adequate insurance cover. Further, taking health insurance can prevent you from high expenses of the hospital which may arise in future. Additionally, taking life insurance ensures that your near and dear ones will remain secure even after your death.
Also Read: TDS on Insurance Commission
8. Pay off high interest debts
High interests debts are a major hindrance to being financially sound. For instance, if you owe money on your credit cards and do not pay it on time, then you have to pay interest at a rate as high as 18%. Additionally, no investment gives you return of 18% or anywhere near to it in a short span of time. Therefore, it is always advisable to pay off these high interest debts.
9. Improve your credit score and review annually
Lastly, credit score is an important measure of being financially sound. It tells lenders at a glance how responsibly you use credit. The better your score, the easier you will find it to be approved for new loans or new lines of credit. Further, a credit score can be improved by paying at least the minimum balance on time.
Now keep these points while planning your future to remain financially sound.
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