Although making resolutions to improve your financial situation is a good thing to do at any time of year, many people find it easier at the beginning of a new year. Regardless of when you begin, the basics remain the same. One needs to follow prudent financial planning tips so that he can manage his personal funds to yield better and more fruitful returns.

Tip No.1: Set your own Budget
This is a prerequisite for any investor to achieve goals in the long run. One should set aside a fixed monthly budget to meet the basic needs. After considering the income and the entire monthly expenses one can always spare out some amount for further investments. A budget may vary from person to person depending on different factors like family income, family size, expenses and lifestyle etc.

Tip No.2: Start Saving Now
This is the golden rule to be kept in mind. Don’t wait for a particular age to invest. Even if you are in your 20s or 30s go ahead with saving right now. Don’t save money in a piggy bank. Idle money in a piggy bank doesn’t grow. Even the saving bank account may not fetch higher returns. Instead, you may invest this amount in a liquid fund. The liquid fund is a type of debt mutual fund which invests money in fixed-income generating instruments like FDs, commercial paper, certificate of deposit etc. around 4%. Save every month and on a continued basis.

Tip No.3: Keep hold of your expenses
Remember the equation INCOME- SAVINGS= EXPENSES. This means firstly save then use the remaining of your expenses and not the other way round. You are the one who knows how to reduce the unnecessary expenditures on luxurious items. Go for the basic utility items first and hold your feelings a bit for luxuries and fantasies. Don’t spend more than what you earn. Avoid excessive use of credit cards and personal loans that usually end up in huge monthly bills.

Tip No.4 Maintain a Personal Balance Sheet
Having a personal balance sheet helps to know what you own and what you owe! It’s a pretty powerful tool to take your finances to the next level. It’s a statement wherein you can jot down your assets and liabilities. The difference between your assets and liabilities shows your personal Net Worth. Before getting started, pull together your bank statements and other proofs of the liabilities. Then list down your assets like the bank balance, all investments, home value, and value of other assets. Take a sum of all the assets to arrive at the total value of your assets. Afterward list down your liabilities like the car loan, home loan, credit card balances and remaining balances in other loans. The sum of all the liabilities will show the value of the money you owe. When you subtract the value of liabilities from assets, you get your Net Worth. Ideally, it needs to be positive which means the money you own is greater than the money you owe.

Tip No.5 Emergency Fund
Keep aside an amount to be used for any emergency situation. You can do so by investing in some good saving plans that bear a fixed rate of interest. You can go in for some short term saving investment plans that don’t have long lockin periods. An emergency fund should be such that you can easily withdraw money, as and when required. So, plan well to have few liquid investments as a part of your portfolio.

Tip No.6: Plan your Taxes well
In tax planning, you analyze your finances from a tax efficiency point of view so as to plan these in the most optimized manner. Even though tax planning is very much legitimate in nature, you need to ensure that you don’t indulge in tax evasion or tax avoidance. From a tax planning standpoint, you can make use of a number of tax saving options. Like the deductions available from Sections 80C through to 80U that are given in the Income Tax Act, 1961. The most efficient way to take advantage of Section 80C is to invest in Equity Linked Savings Scheme (ELSS). It has the shortest lock-in period as compared to all the other tax-saving options available under Section 80C. In this, you can avail a deduction of up to Rs 1.5lac. Additionally, the ELSS is a diversified equity fund helps you to achieve your financial goals via investment in the equity market.

Tip No.7: Get your Risks Covered
You need to realize that your life and property is vulnerable to risks. These risks can lead to loss of income and put you and your dependents in a financial risk. Just like investing is essential for wealth accumulation, insuring is essential for wealth preservation. However, investing and insurance are two separate things which most individuals don’t understand. Term insurance plan provides you higher risk coverage at a reasonable price. Don’t expect returns from your life insurance policy. Apart from life insurance, you may need a health insurance as well. It will enable you to access high-quality healthcare at reasonable prices. Don’t end up shelling out more for less. Before buying life insurance, you can compare policies online to select the one which satisfies your requirement at affordable prices.

Tip No.8: Manage your Debt wisely
Lack of debt management may eat up a major part of your paycheck. You may end up borrowing fresh loans to pay off older loans. If it gets out of control, then you may fall in a vicious debt trap. In case you have a lot of debt to shoulder, start paying off the most expensive one. In fact, the credit card has been regarded as the most expensive form of debt. As soon as your salary gets credited each month, pay off your credit card balances in full. Don’t fall for the lure of paying off the minimum balance. Even before you know, the interest will spiral up to eat out all your savings. Make it a point to use the credit card only in case of emergency. Always keep debt as the last resort. As far as possible, make down payments for your purchases. You can transfer your loan to another bank offering a lesser rate of interest. In this manner, you will save a lot of money going out as interest. Never borrow for assets which are depreciating. Additionally, tax-inefficient loans like personal loans can be avoided as far as possible. You can think of saving and building a corpus to fulfill your goals. In this way, you can avoid falling into the debt trap.

Tip No.9: Save for Retirement Now
As per the present scenario, one has to himself save funds for his retirement. Gone are the days when parents could rely on their children for their living after retirement. In this changing culture and human values, you should always set requisite funds for you. Invest in some long term health insurance and retirement plans, debt instruments that will benefit you at the time of your retirement.

Tip No.10 Proper Research Work
This is important because these days many of us get trapped by fraudulent calls and agents. So, be cautious and do your homework as to where your hard money is being invested. We as customers have every right to know where our money is being applied when we have invested in mutual funds or a diversified portfolio. Take advice from genuine experts in the field of Financial Planning.