By Sameer Joshi
With Covid-19 pandemic impacting every aspect of our lives, it’s time to reflect on the financial decisions made over the years. This exercise will not only help gauge your financial worth, it will ensure you’re on track to meet your life goals.
Here’s a concise checklist that can help you perform a financial audit on yourself.
Assets
These are any financial resources that can generate income or add value to your finances such as cash in hand, savings account balance, investments, property and receivables such as interest due on deposits. Taking stock of your assets gives you a clearer picture of your current income as well as the deferred benefits, and helps you see how well-prepared you are to pursue your life goals.
Liabilities
These are the financial obligations that you owe lenders or service providers such as personal loans, home loans, credit card dues, and any other payables. By auditing your finances, you can ensure that you have sufficient resources to pay off your liabilities as and when they’re due.
Exigencies
Next on this checklist are exigencies and essential expenses that may be recurring outlays or one-time costs. For instance, your children’s school fees are regular, recurring expenses. There may also be emergency expenses. Inflation accounting is another important area to focus on, so that you’re prepared to meet future expenses as well.
Financial plans
Assess your saving habits as part of your audit. List your short-term and long-term life goals, and then formulate a financial plan that can help you meet these targets as per the timeline you’ve drawn out.
Protection net
Even with the right financial plans in place, there’s no telling when life can throw a curveball your way. A life insurance plan can prove to be indispensable. So, ensure that you have this protective net in place.
Following this practice of self-auditing may reassure you of your financial well-being or may make you feel anxious about your financial stability. That’s reasonable, but don’t let panic guide your decisions. Use this time to take stock of your situation and put your financial worth in order.
