The financial year-end is a good time to reflect on what worked well this year and what did not go as planned. It is also a good time to look ahead and plan for the upcoming financial year and beyond.
Start by preparing two financial statements: Net worth and cash flow as of FY 2025. A net worth statement lists all the assets that you own and the liabilities that you owe others. Your net worth will be the difference between the value of your assets and liabilities.
Next, evaluate your emergency fund and insurance. Check whether your emergency fund has an adequate balance and whether you need to increase your life insurance cover and health insurance cover.
Follow a monthly budgeting system to allocate your income towards your expenses, savings, and investments. Evaluate whether you can increase your savings and investments beyond the 20% rate.
Make a list of outstanding balances on credit cards, a home loan, or any other loans. Prioritise loans with the highest interest rate and make timely EMI payments.
Evaluate your short-term, medium-term, and long-term financial goals. Check the progress you have made and whether you are on track to achieve them as per the schedule.
Review your asset allocation and consider rebalancing. Check whether any new asset class or financial product has been introduced and whether it needs to be included in your investment portfolio.
Review your existing credit card portfolio and consider closing any credit cards that have been devalued. Update your will to ensure your assets are smoothly transferred to your intended beneficiaries after you are gone.
An annual review at the end of the financial year or at the start of the next financial year should be part of your financial planning journey.
