When it comes to our health, we ensure to take great care of ourselves. We visit a doctor, take medication, go for regular check-ups, eat healthily, and whatnot. But how about our personal finances? What do we do when our finances are out of sorts?

Rahul failed to realize his financial plan was lopsided, lacked diversification, and was at high-risk banking on the performance of a single asset class (real estate) that locked in his entire savings. (Read his story here). It wasn’t until he decided to get a financial health check done that he decided to change his investment decisions drastically. Today, he owns a robust investment portfolio that is secured, and he is well on his way to being financially free.

Why wait for a financial pitfall to remind you to get your investments in order?

A simple financial health check can save you from major financial pitfalls. Are you wondering what it entails? It gives you a good sense of whether your finances are in line with your goals. A financial health check-up, in essence, identifies the gaps in your money management methods, offers remedies to manage those gaps, and highlights opportunities where there is room for growth.

Here your income, savings, assets, expenses, and liabilities are scrutinized. Your long and short-term goals are carefully chalked out and are financially mapped to understand better what corpus is required and when, to fulfil your targeted goals successfully.

Here are some signs to look out for indicating you to get your finances in order:

  • The total of your cash in hand and liquid assets are less than 3times your estimated essential monthly expenses.
    Alert – Lack of an emergency fund.
  • Your total debts (both long and short term, including credit card outstanding) exceed the total value of your owned assets.
    Alert – Debt overload
  • Your investments are underperforming, and you are losing capital.
    Alert – Faulty investment portfolio.
  • No backup plan exists in case of loss of income or life.
    Alert – Lack of insurance coverage
  • Your monthly expenses exceed your income earned.
    Alert – Lack of savings.
  • Corpus generated for retirement is below 10% of your total income earned (during this period of savings).
    Alert – Lack of a robust retirement plan.
  • Your lifestyle expenses require to be financed through loans and EMIs.
    Alert – Bad money habits.

These are fundamental indicators that confirm that your money habits are hurting your ability to earn more and save more. When it comes to managing money, it is essential to periodically evaluate your financial performance, at least over the last twelve months. This evaluation ensures you stay on track and manage your income carefully.

Here is how a financial health check-up helps you:

• It enables you to identify life goals, maps them financially, and offers a roadmap to achieve them.

• Periodical reviews keep you proactive and on top of your finances, avoiding financial pitfalls.

• Potential risks (of life and assets) are assessed, and ways to mitigate their impact are devised.

• The performance of your investments is analyzed, and opportunities to increase ROI are devised.

• Your retirement plan is reviewed and analyzed to build a corpus within taxation and inflation factored in.

• Highlights ways to reduce the burden of taxes on income and investments.

Money management requires investors to be proactive to ensure they are alert in case of financial mismanagement and can implement remedial actions before things go south. A periodical financial health check-up gives you that necessary peace of mind assuring you that your investments are on track to achieve your targeted financial goals.

When was the last time you took a financial health check?
It’s not too late.

Get a complimentary health check done. It gives you an idea of gaps in your financial goals:

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