Four unavoidable money tasks to do at the start of a new financial year

moneycontrol.com:

As we step in to the new financial year, there are certain essential tasks that we must perform in the beginning, so that our financial matters remain stress free for the rest of the year. Here are four such unavoidable tasks:

Review your savings rate

Savings rate is one of the most critical driver in wealth creation. The thumb rule is to have a minimum savings rate equivalent to your age. For instance, if you are 38 years old, you should save a minimum of 38 percent of your income. The higher, the better.

If it's less, it is important to understand why it's less. Maybe because your discretionary expenses or your equated monthly instalments (EMI) are too high. Perhaps you had some emergency, and your emergency fund, if any, was not sufficient. There can be multiple reasons, which one needs to address.

Review your financial goals

Review your asset allocation

Based on your risk profile, you would have decided to have a mix of equity, debt, gold, and real estate. However, these may have changed during the year because of market events. E.g., in the below table, one can see that equity has increased to 59%. Therefore, it's essential to rebalance the portfolio and move back to the original asset allocation as per your risk profile.

Review your emergency fund

Emergency fund size should ideally cover six months of your expense. It could even be built to contain 12 months’ worth of your expenses. However, when you review, you may realize that your expenses may have gone up due to purchasing a new car or new born, etc. Also, it may have been reduced due to the closure of a loan or conscious reduction in discretionary expenses. Therefore, you must recalibrate your emergency fund to align with 6 months of your updated expenses.

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