5 Best Ways to Improve Your Finances

However, even they cannot guarantee any concrete financial outcome, which is why it is always better to stick to basic financial planning when it comes to improving your financial foundation. Moreover, such planning would also instil confidence and push you towards an organised as well as a sustainable lifestyle that is financially protecting your future. Here are a few tips that enlighten you further on how to improve financial condition.

1. Learn from Mistakes
   Be it a life or a job, you always learn from mistakes. Sometimes, it is our own fault, while at other times, it is the missteps of people around that help us in being careful. Now that the point of discussion here is around 2020, so the miscalculation of not only 2019 but also the preceding years should be considered while doing personal financial planning. However, one should also be careful while rectifying these mistakes as the economic scenarios tend to change over the period of time, and accordingly, minor adjustments have to be made.
   
   
2. Make a Budget
   Another important factor that helps your organise your finances is segregating your income as well as expenses while further dividing your expenditure into different categories. These outlays can be divided under various headings such as essential expenses and non-essential expenses. In addition, you can also allocate some funds for contingency situations that can be related to health, job, or any other aspects that seem logically possible in today’s day and age. Such a budget will help you plan and act accordingly whenever the situation demands.
   
   
3. Control your Expenses
   Once you are done with the budgeting, the first step is cutting down of unnecessary expenses listed down in your budget. These expenses can include some unnecessary purchases that you keep making every month or the luxury expenditures that can wait. However, it is important to understand that expenses cannot be downsized overnight; you need proper management while doing so. Moreover, you also need to ensure that the expenses to be curtailed are actually unnecessary and not something that might lead to a bigger loss in the future.
   
   
4. Automate saving
   As you have already planned a budget and controlled your expenses, now it’s time to go for some automated savings. These savings can be personal savings or through an investment instrument. However, the best savings plan that suits most earning individuals is the insurance plans, be it comprehensive life insurance or an endowment plan or even a ULIP. Moreover, these savings plans can also help you with your tax benefits of up to ₹1,50,000 on premium payments under Section 80C and tax exemptions on the sum assured after maturity under Sec 10(10D) of the Income Tax Act. Furthermore, being an automated saving, it helps you pay premiums online, which saves both time and effort.
   
   
5. Protection of Physical Health
   Physical health is as important as financial health, and the best way to safeguard it is by going for health insurance. Just like any other insurance, health plans protect you as well as your family members in case of any unwanted health emergency. Moreover, with the spiralling medical costs, it is becoming increasingly difficult for most middle-class salaried individuals to financially protect themselves in the absence of any health insurance. So, in order to safeguard yourself financially, purchasing health insurance is also an important factor. Furthermore, it also provides you with tax incentives on your premium payment under Section 80D of the Income Tax Act.
   
   

With all the information provided on the financial planning front, you would be able to plan your finances better. But it must be remembered that such planning depends on how efficient you are in sticking to the plan. Moreover, the plans must also be realistic and not limited to making it look good on paper, because it is you who has to implement the plan for yourself in order to get the best out of it.

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*Tax benefits are as per the Income Tax Act, 1961, & are subject to amendments made thereto from time to time. Please consult your tax consultant for more details.