Financial situations can shift dramatically in a year. Like setting New Year resolutions at the beginning of the year, December is the perfect time to reflect on your accomplishments and take stock of your financial journey. A year-end financial review can help you recalibrate plans based on your progress. Here are key parameters to consider for this review:
Analyse how you’ve stacked up against the monetary goals you’d set at the beginning of the year. Did you have a major financial setback? Were you able to consistently save and add to your investments? If not, what held you back and how can you navigate those obstacles? Did you aim to save up for a vacation or pay off a loan, or build an emergency fund? It’s crucial to be completely honest with yourself so you can celebrate the wins and identify areas that need attention. You can also use this time to refine your strategy or even seek professional guidance for a better year ahead.
A checkup is a good time to explore options to pay down credit card debt or evaluate how you’re faring when it comes to loans. A sound financial strategy should always aim to minimize debt so it doesn’t snowball into something unbearable.
Market trends fluctuate and so does the performance of your investments. Reviewing your financial portfolio lets you rebalance assets and reduce risks. It’s crucial to re-examine investments with regard to rising inflation, too. If you’ve only invested in savings accounts and Fixed Deposits, now is the time to consider SIPs or mutual funds that can prove profitable in the long run.
- Review Insurance Coverage
Evaluate your insurance coverage to ensure you have adequate protection for your current needs and that you’re not overpaying for coverage. Review your health, life, and property insurance policies to ascertain alignment with your current circumstances and risk profile.
A lot of people overlook an emergency fund. But life can be fickle and can throw curveballs your way when you least expect it. Any healthy financial portfolio must include an emergency fund which can come in handy in times of a loss of job, death, medical emergency, etc. Make sure you have enough stowed away in an emergency fund, or plan to start one in the new year.
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Disclaimer: The article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of The South Indian Bank Ltd. or its employees. The South Indian Bank Ltd and/or the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial/non-financial decisions based on the contents and information’s in the blog article. Please consult your financial advisor or the respective field expert before making any decisions.