Invest

9 steps to spring clean your finances every March

Take stock of your wealth nowThinkStock Photos
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Take stock of your wealth now
By Uma Shashikant

We celebrate so many annual events like birthdays, anniversaries. Celebrate your wealth and do the rituals that keep it going, at least once a year. What better time than March- the month of money!
​1. Put your money to workThinkStock Photos
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​1. Put your money to work
Do not let money idle while waiting for the right time and ideal investment opportunity. We associate investing with careful choice. That objective can be achieved by simply making a few choices for the entire year, and keeping implementation simple. We don’t have to go through it all, every time. Have a default investment plan. It can be an index you like, a set of funds you have tracked, or your favorite set of stocks. Put your money into these through the year.
​2. Choose less action over moreThinkStock Photos
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​2. Choose less action over more
Do not associate investing with activity. We feel there has to be constant monitoring, buying and selling, or moving money before a bad time hits, to be successful investors. The buzz has its lure. Do not plan too many things. Make your investment strategy a simple and easy to implement one that can work on auto pilot through the year.
​3. Make annual portfolio review a ritualThinkStock Photos
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​3. Make annual portfolio review a ritual
Letting it lie unattended is not a strategy but laziness. Make it a habit to put down the current value of all your assets, at least once a year in a notebook or on an Excel sheet. See what you have, how their value has changed, and how the proportions are distributed. Just seeing that summary will give you a sense of whether your money is aligned to your long-term goals. Get familiar with the details, so that you are in charge.
​4. Own up to mistakes and make correctionsThinkStock Photos
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​4. Own up to mistakes and make corrections
When we see something performing spectacularly, we are overcome by the anxiety to book profit and lock it. Then losing investments typically become long-term investments. Think what this does to our money. Every investment might not work well and that is what diversification is all about. Our focus should be on the portfolio as a whole. The duds drag it down. Take time to evaluate what is not working and why, and cut losses. That is more important than booking profits.
​5. Think through the annual liquidity planThinkStock Photos
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​5. Think through the annual liquidity plan
Is there a large expense coming up? Like a home renovation or sending a child to college? If you have a monthly investible surplus, you are comfortably covering the basic and routine expenses. It is risky to assume that we can sell off equity investments to meet a large expense, as the value we get depends on the markets. Move money into low-risk investments like bank deposits and short-term debtand liquid funds to meet such needs. Plan ahead for large requirements of money.
​6. Review credit card spendsThinkStock Photos
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​6. Review credit card spends
What we spend over and above the mandatory living expenses are reflected in our credit card statements. They tell us how we indulge in the joys of being able to earn and spend. What begins as a pleasurable spend soon turns into a habit. Taking a look at the numbers will bring deliberation into these decisions. You will see what is excessive and needs control. Choose deliberation over denial when it comes to your spending habits.
​7. Think about financial decisions you tend to regretThinkStock Photos
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​7. Think about financial decisions you tend to regret
We do not decide rationally or robotically. We tend to make decisions with our human flaws and sometimes there is a pattern. We can recognise it if we are able to give some thought to what we repeatedly do in haste and regret. Take the time at least once annually to consider your money attitudes and flaws and you will know how to fix them.
​8. Tighten the nuts and bolts to keep your investment machine running wellThinkStock Photos
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​8. Tighten the nuts and bolts to keep your investment machine running well
Complete the nomination forms; correct the email address on your folios; close bank accounts you don’t use; clean up the mailbox and set up folders to save important information; and close those inactive trading and demat accounts. These are little tasks we postpone endlessly and then crisis hits. Mmany of us have no inclination to do paperwork on tmundane tasks. Devoting an hour once a year is a good idea.
​9. File those income tax returnsThinkStock Photos
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​9. File those income tax returns
Take professional help if needed. But complete that task, providing all the information that is needed and ensuring that your financial life is compliant with the laws of the land. You enjoy an encumbered use of the income you earn and assets you have accumulated, after a simple act of declaring what your sources of income are, and paying the taxes that are due.


(The author is Chairperson, Centre for Investment Education and Learning)
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