Every April, the same story repeats itself. There’s a promise to save more, invest better and finally take control of finances, but a few months down the line, routines slip, expenses rise and the plan quietly loses steam. Sound familiar? The start of FY27 offers a chance to reset, but more importantly, to get the basics right from the very beginning.
In Part 1 of our money makeover series, we looked at the and the smart moves to make in April. In Part 2, we explored why , SIPs (Systematic Investment Plan) and investments. Now, in Part 3, the focus shifts to something even more fundamental, i.e., before setting the tone for the year, it is important to pause and assess how your money is flowing into four key areas: insurance, investments, tax planning and your emergency fund.
Before thinking about returns or new opportunities, it’s essential to understand your current financial position.
Kumar Binit, CEO, airpay money, puts it simply: “Start with an honest look at where your money is actually going. A thorough income-versus-expense review will set the tone for the entire year.”
With inflation continuing to put pressure on household budgets, he suggests assigning a purpose to every rupee. Automating savings early can help prevent overspending, while clearing high-interest debt should take priority over chasing investment returns.
Insurance is often treated as a one-time decision, but that approach can leave gaps over time.
“Medical inflation is running at 14 to 16% a year, which means a cover that felt adequate two years ago is already falling short,” Binit points out.
He recommends keeping life insurance at 10 to 12 times your annual income and ensuring that critical illness and accident riders are included.
Prashant Mishra, Founder and CEO, Agnam Advisor, echoes this view: “Insurance should be the first checkpoint. Life cover must reflect current income and liabilities, while health cover should account for rising medical costs.”
For many urban households, he adds, a cover of Rs 20–25 lakh, including top-ups, is increasingly becoming necessary.
Markets evolve, and your portfolio should too.
Binit believes that global uncertainty and changing interest rates make this a good time to review allocations. “Consider tilting equity exposure toward quality large-cap and flexi-cap funds,” he says, while also suggesting a small exposure to international ETFs (Exchange Traded Funds) as a hedge against currency risks.
He also highlights the importance of diversification, recommending a 5–10% allocation to gold and REITs (Real Estate Investment Trusts) as a buffer against inflation. In fixed income, shorter-duration funds may be better suited in the current environment.
Mishra, meanwhile, underlines the importance of asset allocation over market timing. “While equity markets are not cheap, large caps offer relatively better comfort than mid and small caps in pockets,” he says.
The traditional advice of keeping three to six months of expenses aside may no longer be enough.
“For most people, nine to twelve months of essential expenses is the right target now,” Binit says, pointing to uncertain job markets and rising costs.
He recommends keeping this money in liquid and easily accessible options such as liquid funds or high-yield savings accounts, rather than equities.
Mishra suggests a similar approach, advising six to nine months as a baseline, extending up to a year for those with less stable incomes.
Tax planning often becomes a last-minute exercise, but starting early can make a significant difference.
“Tax planning done in April is worth far more than tax saving done in March,” Binit says. He advises choosing between the old and new tax regimes early, setting up SIPs for Section 80C investments, and declaring exemptions such as HRA and LTA in advance.
Mishra agrees, noting that early planning allows investors to spread their investments across the year and make better use of available benefits, including the Rs 1.25 lakh LTCG exemption.
A well-structured financial plan is not just about saving more, but about aligning your money with your goals.
Binit suggests dividing goals into short-term (up to two years), medium-term (three to seven years), and long-term (beyond eight years). Each category should be matched with suitable investment options to avoid disrupting long-term plans for short-term needs.
A new financial year often brings fresh intent, but also familiar mistakes.
According to Binit, the biggest mistake is inertia—carrying forward the same budget, SIPs and investments without review. Other common missteps include chasing last year’s top-performing funds, ignoring inflation while setting goals, and confusing tax saving with financial planning.
In other words, FY27 does not demand a complicated financial strategy. What it really needs is clarity and consistency. A simple review of your expenses, insurance, investments, taxes and emergency savings can shape your financial year far more effectively than any quick fix.
Because in the end, it’s not about making big, dramatic moves—it’s about getting the basics right, and sticking with them.