10 Financial Planning Checklist For 2023

  • 04 Jun 2024
  • Read 8 mins read

10 Personal Finance Resolutions To Manage Your Money Better in 2023

Most of us do not take financial planning too seriously. But, did you know that a proper and well-drafted financial plan can form the basis of long-term wealth creation? We love to start the new year with new resolutions. Here are 10 mantras for you to unveil the secrets of financial planning in the year 2023.


1) Put down your goals on a paper

That is how you start financial planning. Put down all your financial goals on a piece of paper. A dream becomes a goal when you put a financial or monetary value to it. That is what tells you how much money you would need in the future. Separate your goals into long-term goals (beyond 10 years), medium-term goals (5-10 years) and short-term goals (3-5 years). When you write down goals, it is OK to be redundant, but be comprehensive.

2) Start your financial plan as early as possible

It is said that financial planning is about making money work hard and money works harder if you give it more time to work hard. That means; you need to start your financial planning journey early. One complaint is that you don’t know all your future goals at an early age, but that is OK. You can start the process and fine-tune along the way. The sooner you start, the more you compound and the more your ultimate wealth ratio to meet your goals.

3) Budget and cut your coat according to your cloth

This may sound rather prosaic, but there is an important implication to this point. Normally, we believe that you must wait till you have enough surplus funds to start saving. Believe me, that day will never come. You need to first work out target savings per month and then adjust your budget according to that. Unless you do that, savings can never really start. A lot of savings can be squeezed out to avoid wastages and slippages in your spending patterns.

4) Manage your debt intelligently and cut high-cost debt

When you repay a credit card debt with 35% annual cost, that is the amount you are saving annually. Now think of any investment that can yield you 35% assured. The moral of the story is that if you have high-cost debt, you can never create wealth as the interest cost will eat away most of your earnings. Your earnings may grow, but if most of that will go towards servicing high-cost EMIs, you are not going to get anywhere close to your goals.

5) Create an emergency fund for exigencies

What exactly is an emergency fund? You set aside about 4-5 months of income as savings in a liquid fund account. You never know when exigencies will strike you. COVID was a classic example when people were not only struck by high medical costs but also by the loss of jobs. You may lose your job or your business may take longer than expected to pick up and the list can go on. If you have an emergency fund, you can fall back upon it for some time, without having to touch your long-term investments.

6) Take adequate insurance to cover all possible risks

How much insurance is needed? Let us talk about medical first. Have at least a cover of Rs10 lakh as a floating cover for your family. Your life cover should be enough to take care of daily expenses in your absence via risk-free investments. Get your assets insured, but more importantly, also get your liabilities insured. You surely don’t want your outstanding home loan or car loan to become an embarrassment to your family in your absence.

7) Rely on an advisor, but educate yourself too

There is no harm in taking help; and in fact you should take help. Rely on an advisor to guide you through the process of financial planning. It may cost you a bit, but the fee is worth the trouble. However, that does not in any way free you from adding to your knowledge. Read up about investment options, ask questions to your advisor and keep yourself abreast on what is happening with equities and mutual funds. This can also help your advisor deliver the best solution for you.

8) Use SIPs by pegging such SIPs to your goals

Now comes the actionable part. How do you reach your financial goals? You need to do it through systematic plans. Peg equity fund SIPs for long-term goals and debt fund or hybrid fund SIPs for shorter and medium-term goals. More important, each SIP must be necessarily mapped to a specific goal so there is total clarity on what your money is meant for. You can have multiple SIPs pegged to one goal or you can have a SIP for multiple smaller goals. That does not matter. The idea is to have a clear mapping.

9) Ensure that your actions are tax smart

In financial planning, what eventually matters is post-tax returns. If you are invested in a debt fund and are giving away 30% on dividends as tax, it is not making sense. Rather structure it as a systematic withdrawal plan or SWP to make it more tax efficient. Also, when you plan taxes with investments, ensure that your investments locked in are not beyond what is actually required for you. For instance, don’t go overboard on ELSS funds.

10) Review and monitor your financial plan consistently

No financial plan is complete unless it is reviewed on a continuous basis. Review against your changing income levels, your changing goal posts and the changing market conditions. You may not make changes to your plan, but an annual review is absolutely mandatory. It shows you where you stand vis-à-vis your goals.

Year 2023 is a good time to start seriously thinking about your long-term future. The financial plan is just your starting point.