How to plan for your finances in 2023 – Forbes Advisor India

Each year is filled with new challenges that we have to overcome, learn from and move forward. Therefore, it is a good idea to review our financial decisions from the past year based on our current financial situation and market environment. Learning from past financial decisions can help us make better financial decisions in the future.

In recent years, financial planning in general has evolved, and more people are realizing the importance of having a long-term financial plan. Today’s digital savvy generation prefers to manage their finances using digital platforms or applications. A comprehensive solution that allows them to plan, manage, grow and meet their financial needs. Millennials are seeking a greater degree of financial freedom, which also contributes to this trend.

How do you plan your money

Financial planning plays a pivotal role in allocating funds to the most appropriate investment vehicle to add value to your overall portfolio. It’s the perfect time to reflect on your previous year’s financial practices and begin to reflect on your financial journey in 2023.

The financial planning process should be viewed as a scientific approach to achieving life’s milestones rather than as a process dedicated solely to maximizing tax savings in the fiscal year. The purpose of creating a financial plan is to understand your financial situation, prioritize your goals, achieve your goals, and maintain stability even during difficult times.

Here are some starter ideas that can help you on this journey:

• Develop a budget

Determining your budget requires knowing which goals to prioritize. The first step you should take is to analyze your situation in terms of income and expenses as this will help you to allocate your money efficiently. You should do a new budgeting activity annually, keeping current scenarios in mind, and this annual budget can be broken down on a monthly basis for ease of planning.

By following a set budget, you will be able to assess your spending behavior and help you eliminate unnecessary expenses.

• Invest at an early age

Once you earn your first income, you should make it a habit to invest it for a higher return. It is essential that you start investing early so that you can take full advantage of the power of compounding, which has the potential to help multiply your returns exponentially over time.

• Assess your appetite for risk

You must determine your investment capacity, choose the appropriate assets and allocate your investments accordingly. Then, even if your investments are not doing well, you don’t have to worry about financial burdens.

• Monitor discretionary expenditures

It is crucial to divide your expenses into essential and non-essential. You may want to spend on high-end items; However, it is necessary to plan for these expenses systematically. Ask yourself if you really need these items, and if yes, set aside a collection each month to ensure that you can make that purchase without affecting your overall liquidity or credit standing.

Watch your credit card limit (if you have one) and make sure you have enough balances to clear bills on time to avoid a debt trap.

• Review your portfolio regularly

There is no point in investing unless you make efforts to monitor your portfolio on a consistent basis. This gives you the flexibility to course correct, if necessary, or simply to increase investments in well-performing assets. Either way, it will help improve the overall quality of your investment portfolio.

Also, it is wise to review your credit portfolio regularly, and one can do this by monitoring your credit report. It will help you detect any discrepancies in payments and reporting and will enable you to take corrective actions in a timely manner.

• Plan your taxes in a smart way

It is beneficial for you to begin tax planning for the fiscal year after considering your current financial health, your life goals (both short and long term), the historical performance of your portfolio, and an assessment of current macroeconomic conditions. It’s wise to start this planning journey sooner rather than later, to avoid rushed decision-making and unwanted tax cuts. For the most tax-efficient investment, you should track all tax breaks and deductions across your investment vehicles.

Getting started on your financial planning journey can be simple and smooth. While planning for a healthy 2023 financially, here are some necessary things to keep in mind.

Things to keep in mind while planning financially

• Prioritize insurance

There are several aspects of insurance such as protection, wealth generation, and a few options that offer the policyholder a combination of the two. It is important to have life and health insurance in your financial plan, especially if you need to cover your family’s expenses each month. This is an essential component of your financial planning and should be of the utmost importance to avoid affecting your savings due to unforeseen emergencies.

• Put your debt obligations first

You should make a plan that will enable you to pay off the high interest debt as soon as possible to reduce your debt burden. As a result, you can save more and invest it wisely in investment ways to build wealth.

• Save even in an emergency

Emergency funds are essential, and the pandemic has taught us how lives can be saved in a time of crisis. Putting that extra money aside each month can be a challenge. However, this emergency plan will ensure that you have enough funds to cover your expenses if you lose your job or face an emergency situation.

• Don’t forget to keep in mind inflation

It is important to consider the negative effects of inflation when making an investment. The capital value of your money decreases over time, so your money must grow faster than inflation if you are to achieve your financial goals. With the passage of time, financial needs evolve, which mainly require in-depth and proper planning. Hence, it is advisable to set a certain expenditure limit and a minimum monthly saving amount that can help you in tackling inflation.

• Retirement planning

It’s never too early to start planning for your retirement. Responsible retirement planning gives you the flexibility to invest small amounts in several long-term investment options to build a large portfolio over a period of 10 to 15 years. A sound retirement plan enables you to establish a financially secure tomorrow.

• Maintain a good credit score to benefit from the loan

Many life milestones require significant financial outlays, which may not necessarily be met with the available liquidity. This is when you may choose to opt for credit from reputable financial institutions. Getting credit for the purchase of your car or first home is common, and having a good credit score is an essential prerequisite for fulfilling this need.

A good credit score reflects good credit behavior and instills confidence in the lender about your ability to repay. It also allows you to negotiate with the lender to avail credit on better terms.


You can put together a simple checklist to keep track of all of these activities. Set a monthly reminder on your phone for regular payments and stick to your payment schedule to ensure you’re on track with your financial plan. Alternatively, you can take advantage of a personal financial management tool with all these functions built in. The start of a new year is an ideal time to reflect on areas for improvement and get a head start on building strong financial health.

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