10 Smart Money Moves To Improve Your Finances in 2023

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Investors are cautiously optimistic about the new year after a turbulent year for the stock markets, surprisingly strong returns from gold and real estate, and muted returns from debt instruments. ET Wealth consulted experts to find out what investors should do in 2023 to maximize their returns. Here is what they have to say. Fixed income investments have become more appealing as a result of rising interest rates, and some analysts predict that debt will generate better returns in 2023 than equities. In the first or second quarter, interest rates are anticipated to reach their high before beginning to decline. Debt funds may then provide high single-digit returns. According to experts, now is the moment to seize this chance.

How to Plan Your Finances?

  • Create a Budget

Knowing which objectives to put first is necessary when creating a budget. Analyzing your current situation with regard to income and spending is the first thing you should do since this will help you manage your money more effectively. In light of the present circumstances, you must prepare a fresh budget each year. For convenience of planning, this annual budget might be divided up by month.

You will be able to assess your spending habits and cut out wasteful spending if you stick to a fixed budget.

determining your risk tolerance

You should assess your capacity for investing, pick the appropriate assets, and distribute your money appropriately. You wouldn’t have to worry about financial obligations then, even if your assets underperformed.

  • Review your Portfolio on a regular basis

Unless you make an effort to regularly review your portfolio, investment has no point. This offers you the freedom to change direction if necessary or just increase your investments in high-performing assets. In any case, this will contribute to raising the overall caliber of your investment portfolio.

Additionally, it is a good idea to periodically review your credit portfolio. You can do this by keeping an eye on your credit report.You will be able to quickly identify any inconsistencies in payments and reporting and take appropriate action as a result.

  • Invest from a Young Age

Make it a practice to invest your money as soon as you receive your first paycheck for a greater rate of return. To fully benefit from the power of compounding, which has the ability to help boost your profits exponentially over time, you must start investing as soon as possible.

  • Make wise Tax Planning Decisions

After taking into account your present financial situation, your long- and short-term goals, the performance of your portfolio historically, and an assessment of the macroeconomic environment, it is advantageous for you to start tax planning for the current fiscal year. To avoid hasty decisions and unnecessary tax deductions, it is advisable to start this planning process as soon as possible. You should keep track of all tax exemptions and rebates across all of your investment instruments to make the investment that will save you the most money in taxes.

Top 15 Money moves – 2023

1. Start Fresh, Set New Goals and Make a Plan

Its resolution season but those rarely last. Instead of making lofty self-promises that probably won’t come to fruition, turn over a new financial leaf for 2023 with a plan based on realistic goals.

2. Review Your Money Goals

The first place you’ll want to start is to ask yourself, “What are my money goals?” Writing your goals down can help you visualize them and set your plans in action. Whether it’s saving for a down payment on your first home or a new car, paying off credit card debt, refinancing your student loans for a lower interest rate, or to start micro-investing, putting these goals down on paper will help you get started.

3. Start SIP in ELSS Fund

We Indians have a habit to do investment planning at the last stage. Just check if you have made investment for claiming 80C deduction in March, then you fall in this category. If you start SIPs in ELSS funds from April, you won’t have to worry about tax planning at the end of the financial year. If you do an ELSS SIP of Rs 12500/- per month, by march you will by default invested Rs 1,50,000/- which you will able to claim as 80C deduction. A study says the SIP investor who started investing from April onwards made more money than the taxpayer who invested at one goes in March.

4. Tune Up Your Stock Portfolio

With all that’s happened this year, this is a good time to make sure your stock investments are aligned for your goals. It’s likely that your portfolio will need to be rebalanced. It’s been a volatile few months, and you can leverage this to your advantage. You’ll also want to account for the potential for higher interest rates in the coming months. Here’s some guidance to attending to your stocks at the end of the year

5. Start Budgeting

Budgeting is key when it comes to managing your finances responsibly. Luckily, there’s a simple 50/30/20 budgeting rule you can follow in 2023 to keep your finances in order.

  • 50% “needs:” your monthly rent or mortgage, groceries, gas, medical expenses.
  • 30% “wants:” entertainment, dining out, traveling.
  • 20% “savings and debt:” monthly contributions to your savings account, your student loan payment, or your investments.

6. Open an NPS account

The NPS has gradually shed many of its shortcomings in recent years. In 2015, the Budget gave an additional deduction of Rs 50,000 under Sec 80CCD (1b). In 2017, 40% of the maturity corpus was made tax free. Now, the entire 60% that can be withdrawn at the time of maturity is tax free. Also, one can opt for a higher 75% allocation to equity funds. If you have still not opened an NPS account, it is time to open one now. “In the long term, the earning potential of NPS is higher compared to other instruments for retirement savings.

Opening an NPS account is easy if you are KYC compliant and have a Net banking account. Just log on to the NPS portal and follow the instructions to open an eNPS account.

7. Remember your Credit Card Rewards

Credit card rewards expire, and they can be a moving target. Some cards have relaxed those expiration dates because of the pandemic. The end of the year is a good time to check your rewards and ensure that you don’t let them expire before you can use them.

8. Check your Credit Score

This may seem like a given, but many people aren’t sure about their current credit score. Your credit score updates periodically and is affected when you open or close new lines of credit, when you make timely payments (this is good!) or miss payments (this isn’t so good) on a loan or a credit card, or when your credit access line increases.

9. If You Don’t have a Retirement Account, Open One Now

If you’re not saving for retirement, the single best thing you can do is open a tax-advantaged account and stuff as much money into it as legally possible before New Year’s Day. Not only will you start building a nest egg, but you very well might lower your 2022 tax bill.

10. Make Sure to Put yourself First

Making sure you’re on the right track financially can seem like a daunting task. It’s of utmost importance to take care of you in the process and not get too stressed out about money! Whether it’s exercise, meditation, or healthy eating habits, your mental and physical wellbeing come first. And yes, it’s still possible to save money while making healthy life choices.

11. Don’t Invest too much

April is the right month to start with your financial planning for the year ahead, but entire tax planning for the financial year 2021-22 should not be done at one go. This is because keeping in mind the Interim Budget and then investing might just go wrong if rules are changed in full-year Budget in July. Hence, try to avoid investing the lump sum in any tax saving avenue.

12. Look at Medical Expenses

If you still have money left in your flexible spending account, you may want to make that doctor’s appointment you’ve been putting off or buy qualified items so that you get the reimbursement for this year.

13. Make these Moves to Lower your Tax Bill

Things you do now can have a significant impact on the amount of taxes you have to pay in April. We have a list of 10 things you can do to make sure you’ve done what you can to make that figure as low as possible.

Whether it’s to prepay bills for deductible expenses or to sell investments that have lost value, there are things you should do this time of year to make sure you’re not paying unnecessary money to Uncle. You should also max out your tax deductible retirement savings and contributions. Check your charitable donations to make the most of their impact on your taxes, whether you itemize or not. And if you’re thinking of investing in a mutual fund at the end of the year, make sure to check when the fund is paying its capital gain distribution. You don’t want to pay tax on gains you didn’t enjoy

14. Create an Emergency Fund

It is essential that you set aside 4-6 months of your family’s living expenses need to meet with any unexpected circumstances, instead of dipping into the corpus you have planned for your other essential financial goals.

An Emergency fund is must have for all of us and if you haven’t created one already, now is a good time to start. For those who already have an emergency fund in place, make sure you review your fund in regular intervals and top it up in case of any shortfall.

15. Analyze your Debt Situation

Keep a check on your financial outflow towards your Home Loan EMIs, car loans, credit card payments, etc. You must know how much debt you can comfortably take, without any stress on your cash flows. Taking on too much debt can have financially damaging effects in the long run.