If you borrowed a loan to fund your education or others, make sure to repay it first. Borrowing multiple loans at a time increases the risk of default in repayment. To maintain disciplined personal financial planning, make sure to take a credit that you can easily repay.
Financial experts recommend that your loan burden must not exceed more than 50% of your income. Also, make sure to increase your monthly instalment in line with increasing income. This helps you to repay your debt in a shorter period.
As the age progresses, an individual is responsible for handling his finances and securing his family's financial well-being. Hence, note these following tips to maintain disciplined personal financial planning in your 40s.
Create Investment Portfolio
To meet your additional expenses, instil a habit of investment. Equity investment is one of the mediums to save on your tax payables. If you are a beginner, consider investing in hybrid mutual funds.
Although, depending on your risk appetite, diversify your investment portfolio to avoid market risk. Consider an investment horizon of 10 to 15 years. It is also important to balance it annually or every 6 months.
Plan for Tax Payables
Being tax-aware and creating a tax plan is important to know how much and when it is deducted. At the same time, make sure to invest in assets like mutual funds, PPF, etc., to multiply your wealth and save on tax payables.
According to a survey in 2021, 51% of Indians don't have a retirement plan. Estimate your expenses post-retirement. Accordingly, create a plan and invest. Also, focus on estate planning.
Take note of the following insurance cover to secure your old age:
- Life Insurance
- Health Insurance
- Social Security or Lifetime Annuity
- Long-term disability coverage and more
However, before moving ahead, here's a quick disclaimer. Experts recommend contacting a financial adviser to make an informed financial decision.