As we have entered 2020, its time to have a complete re-assessment of the financial activities during the last year and make plans for the coming year. With an evaluation of the financial year 2019, you would be able to get a clear idea of what new changes need to be done in your financial planning for the year 2020.

If you are clear about the condition of your financial health in 2019, your income, expenditure, and savings in the year 2019; then it would be easier for you to make better financial planning for the New Year. There are some major factors which must be re-visited to know about your financial health during the last financial year.

Your outstanding debt

In simple terms, debt is the money that you owe to others. If your debts have reduced over the last year, then there is nothing to be worried about. You can maintain the same pace of expenses that you have maintained throughout the year and make use of credit cards wisely.

However, if your debts have increased over the year, then it is troublesome. You will have to make out strategies in 2020 by which you can reduce your debts. You should first make a monthly budget, commit to the budget and reduce your expenditure. You can pay off the debts which have higher interest first and then the lower interest ones later. Moreover, you should try and pay as much as you can afford to get rid of these debts as soon as possible.

Your credit reports and credit score

You need to check your credit report at least once in a year to ensure that your credit score and other information related to credit are all going right. You can check your credit report to ensure about certain information i.e.

  1. To ensure that no one else is using your identity and gaining credit.
  2. To review the information in the credit file and have a confirmation that everything is right.
  3. By viewing the credit report, you are having a glance at the way you are paying your debts and your credit management.

Your net worth

Net worth can be calculated by deducting total liabilities from your total assets. When you are doing so, you find out the net worth. Then you can analyze and compare the net worth in the previous years. If the net worth has increased over the years then it is a positive symbol, otherwise, you need to track your expenses closely. You must create your monthly budget and keep your expenses aligned with that of the budget.

Investment portfolio

This is an important area that needs to be highlighted while reassessing your financial health in 2019. You should ensure that the investments which you have done have high returns and less risk involved. You should be earning good returns and should have made investments into mutual funds, gold, shares, cash, etc. If your investment portfolio is not as per your expectation, you would be able to re-calibrate your portfolio and bring diversification into your portfolio in 2020.


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Element of savings

Savings are essential and are the sole intent of the entire financial planning. You will always have to try for saving a portion of your income either in a savings bank account, emergency fund or recurring deposit account. You must have liquid cash and easily liquid able investment with yourself for an unprecedented situation. If you have good savings, then your financial health is good but if there are no adequate savings then you need to monitor your expenses very closely. Your budget needs to be followed and you can follow many other strategies to control your expenses.

Insurance: Health, Life

This is another important area that must be highlighted while evaluating the financial year 2019. Whether you have purchased your health insurance policy and term insurance policy or not, and are they providing adequate cover or not? If your health insurance policy and your term insurance policy are active and are meant to provide adequate cover then your financial health is good.

By re-visiting these highlighted areas, you can have an evaluation of what your financial health and journey has been during the last year. Based on this analysis, you can make resolutions and start your financial planning for the upcoming year.

Financial Planning for the year 2020

Financial planning is extremely essential for the improvement in financial health. Financial planning will help you to look at the bigger picture and set your long-term and short –term financial goals. It is the process of listing your needs and wants, utilizing the money in the right avenues so that you have the money for use whenever needed. If you have a financial plan, then it becomes easier to make financial decisions and follow the right track for achieving the goals.

While you are creating financial plans, you will have to follow some easy steps and consider the below-mentioned points in your mind.

Your current net worth

Assets + Income – Debt- Liability = Net Worth. This is STEP #1 for your #FinancialPlanning2020.

Pen down your financial goals

Your financial goals can be short-term, medium-term or long-term goals. Short term financial goals can be getting married, starting a family, buying a new car, etc. A foreign vacation can be a type of medium-term financial goal and long-term goals can be higher education of your children, getting your children married, your retirement plans, etc.

Penning down the same is STEP#2 for your #FinancialPlanning2020 so that it can be achieved in a systematic manner.

Amount of money you need and when

The exact inflation-adjusted amount of money you may need for meeting various financial goals is STEP #3 for your #FinancialPlanning2020 so that you can plan your investment portfolio and tax planning accordingly.

Asset allocation and Risk Profile

Your investment portfolio depends upon the amount of risk you are capable of withstanding and it depends on factors like age, dependents, liabilities, income, etc. and your current asset allocation. If you have more equity than your asset allocation requirement, you need to reduce the exposure and vice versa. This is STEP #4 for your #FinancialPlanning2020.

Your current investment portfolio

The constituents of your investment portfolio can contain various asset classes like debt, equity, real estate, gold, etc. is what determines the way ahead for STEP #5 of your #FinancialPlanning2020.
With these important factors for consideration, you can go ahead and make your #FinancialPlanning2020.

Steps to Financial Planning in 2020

Once you have the Financial Goals of 2020, your income and expenses, asset allocation and risk profile as well as your current Investment Portfolio, planning the steps for a healthy 2020 is simple.

Let us have a look at the financial plans which can be made in the financial year 2020.

Create your Emergency Corpus

One of the major issues faced in daily life is the situations of emergency which can lead to a financial crisis. An emergency can come up in the form of a medical emergency or a loss of a job. These situations can lead to a financial crisis and you need to be prepared for facing such situations. An idea of an emergency fund is liquid cash which would be available in your bank account or a form of investment that can be liquidated easily. You should include creating an emergency fund as one of the major financial resolutions for 2020.

Debt Consolidation

You should try to consolidate your debts as quickly as possible. By the faster clearance of all your debts, you would be able to lead a life of your choice and would no more be under financial stress. You need to clear the high-interest debts as quickly as they have a negative impact on your credit score if not repaid on time like personal loans and credit card.

Automate your regular payments

Automated payments can help you in paying your credit card bills and loan EMIs on time. People sometimes forget to pay their bills on time and this can be a factor affecting their credit score adversely. By automating your payment, you are giving standing instructions to your bank for deduction of the defined amount from your account and deposit it to the loan provider’s account. This will be done on a particular date which has been set by you in the instructions. By this, you will never miss out on paying your credit card bills and loan re-payment amount on time. Your credit score will not be hampered anymore due to the missing bill payment deadline.

Track your budget

If you have not been doing this in 2019, you should immediately start implementing this in your financial planning. You can use various apps or financial tools available for keeping a track of your expenses. With budget tracking, you will be able to identify those areas where there is overspending and need to be controlled. Moreover, your credit card companies will be providing you with an annual report or transaction summary which you can use to find out those categories where you need to reduce the spending to be able to stick to your budget.

Re-balancing of the investment portfolio

If you have not obtained much benefit from your investments in the last year, then it’s time to review your investment portfolio and bring about some changes in the portfolio. While re-balancing your investment portfolio, there are certain important points which you should consider.

Focus on an overall mix of investment tools

You should review your asset allocation and have an overall mix of bonds, cash, and stocks together in your portfolio. You should ensure that your investment portfolio is synchronized with your financial goals and the amount of risk that you are willing to take.

Diversification of assets

Diversification of assets will help you in risk reduction and in achieving your financial goals. By diversification, if the returns on one of your assets are not too good you can expect good returns from another asset.

Tax payment

Suppose, you are paying a major portion of the interest you earn from investments as income tax you must choose those investment options which have tax-saving benefits associated with them. Some of the tax-efficient investment options are Retirement plans, Municipal bonds, ETFs (Exchange-traded funds), etc.

Retirement planning

Retirement is that phase of life during which your active income might be limited and there is an increase in health-related problems gradually. Earlier, retirement was considered to be the dependent phase of life but the concept has changed now. Several retirement plans are available which help in providing a regular source of income after retirement, benefits on plans associated with the treatment of ailments, and several other benefits. One of your major financial resolutions for 2020 should be investing in good retirement plans to ensure a peaceful and independent life even after retirement.

Portfolio Consolidation

You might have accounts in multiple banks, investments in various places, etc. which needs to be consolidated in one place so that you can view it all together with one login ID and password. Having multiple bank accounts, credit cards which you do not use, etc. can be quite a difficult task to effectively consolidate your entire investment portfolio.

Evaluation and analysis of last year’s mistakes

This is important and essential for making improvements in your financial health. You can have an honest review of your financial strategies followed over the last year. This can give you a reflection of some of the financial mistakes which you had committed and could have been rectified. You can learn from those mistakes and make resolutions for not repeating them in the New Year.

Financially Literacy

It is necessary to improve your financial knowledge and you can dedicate a few minutes a day to improving your knowledge of finances. If you are planning to read some books, then you can include some finance-related books for your knowledge. Also, you can gain financial knowledge by reading web articles, newspapers, magazines, etc. When you are financially literate you will be able to take your decisions related to finances more confidently.


Hence, with the New Year around the corner; new resolutions and planning are a must for all of us. However, what is important is the commitment towards these resolutions and plans may it be finances or any other fields of your life. You can make a self-evaluation of your activities in 2019 and make changes in your plans accordingly with a hope of good returns in the New Year.


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