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‘To err is human, and to learn from it is wisdom,’ or so it should be. The unprecedented developments in the past few years have revealed several financial mistakes we have made throughout our lives. It also brought to light the fact that perhaps we should not postpone minor yet important decisions for the sake of lifestyle.
Overall, as the new financial year begins, we should take the learnings from these unforeseen times into the next year.
Key Takeaways
Financial stability starts with clear planning, informed decisions, and consistent habits.
Having a contingency fund and the right insurance cover protects your family during unexpected emergencies.
Annual budgeting offers better control over savings, taxes, and non-essential spending.
Smart credit card usage can improve cash flow and help you earn rewards without falling into debt.
Clearing high-interest loans early saves money and reduces long-term financial pressure.
Here are 5 financial management actions to help you amend your money management and ensure a safer future for your loved ones:
1. Retouch Your Contingency Plan
Lack of a contingency plan was one of the most important mistakes that the world witnessed in the face of the pandemic outbreak. With urgent hospitalisation and even sudden loss of life, those who had not subscribed to health and term insurance plans felt vulnerable.
Thus, in 2025, don’t leave anything to chance. Take a moment to plan for your family’s survival during emergencies. Here’s a list of things you should consider for a good contingency plan:
Get the Best Term Insurance Plan for Your Needs
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Get Adequate Health Cover
Health insurance can support you financially in case of sudden hospitalisation. Adequate health cover means that the benefit amount of the cover is large enough to allow the best medical care for you and all your family members. Yet, at the same time, the cover should be:
• Affordable for you
• Should keep up with inflation
You will need two kinds of health covers for your family. One is the Mediclaim insurance, which takes care of hospital bills directly. The other health insurance protects you financially against dreaded diseases, which are unpredictable and can be financially devastating.
What If You Already Have Health Insurance?
If you already have health insurance, all you need to do is check the following:
• Is the coverage adequate?
• Does it cover your spouse and child?
• Do your parents have adequate health cover?
If your existing health cover is low, you should try and secure a higher sum insured under the plan. While you can increase the cover under Mediclaim insurance with critical health cover, you will need to buy another policy. You can also add new family members to your existing Mediclaim insurance plan.
Did You Know?
Many term policies are also “convertible,” as they can be converted into a permanent life insurance policy.
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Secure An Adequate Term Life Cover
Term life cover is a minor cost to pay for lifetime financial protection of your loved ones. You can ensure an adequate term insurance cover for your family, which will provide them with the following in case of your sudden demise:
• Large lump sum to take care of debt and invest for future financial goals
• Regular monthly income for the household and lifestyle expenses
With term life cover like iSelect Smart360 Term Plan byCanara HSBC Life Insurance, you can even secure a growing monthly income for your family to accommodate the changing needs. Growing a monthly income option is especially useful if you have a young family. It gives you a life cover of up to 99 years and an option to get back the premium paid on maturity of the term insurance. You can also get a steady income benefit with this term insurance plan once you reach the age of 60.
What if You Already Have a Term Life Cover?
If you already have a term life cover, you need to check the adequacy of its duration. You should revisit the term cover either every few years or when any of the following events have happened:
• Your income has grown substantially
• You have a new dependent family member
• You have acquired a new loan, like a home loan
• Your family’s lifestyle has changed
The best term insurance plans, including iSelect Smart360 Term Plan byCanara HSBC Life Insurance, allow you to increase your sum assured on these occasions. It also allows you to add your spouse and opt for including child benefits to your term insurance. With iSelect Smart360 Term Plan, you can also choose to increase your term cover every year automatically.
Do You Have A Contingency Fund?
Ever since the pandemic the employment market has suffered setbacks due to an uncertain future. These events threw many of the victims back to the planning board if they did not have enough emergency funds. Emergency funds help you in case you suddenly lose your income. Even when you are single and have no dependents, you will need a pool of funds to take care of your expenses till you secure a new income source.
Three to six months of following expenses should be enough to help you sail through such emergencies:
Household expenses: kitchen, electricity, water, internet
EMIs: Although there was a moratorium scheme in 2020 for borrowers, it may not happen in future. Thus, preparation is the best solution
Insurance Premiums: You may stop your regular investments, but you must not lose your insurance cover in such times.
Additional Expenses: You will need to incur expenses on commutation and employment search, so have some additional money for this.
2. Plan Your Annual Expenses, Savings & Taxes
Looking at the bigger picture could lead you to larger breakthroughs with your money. If you want to save more, lower your taxes, and grow your wealth faster, annual planning can give you the wings you need.
Annual planning of your expenses, savings and taxes will involve the following steps:
Review previous year’s bank, credit card and mobile wallet statements for the items you spent your money on.
Classify all the spending in three groups: Important, Long-term Investment and Aspirational (Aspirational expenses are momentous purchases which are more lifestyle spends than based on immediate family needs. For example, dining out, birthday parties, etc.)
Budget Each Outflow: You can put a lid on the spending by assigning a limited budget to it, especially on the aspirational expenses.
Automate Your Investments: Automating your investments will help you in meeting your investment needs towards your goals. This discipline is very useful if you want to be in a better financial situation.
3. Spend on Financial Education
You may be surprised by the limited knowledge you received during schooling about the most important part of your life – money. However, you do not have to continue to suffer the same limitations anymore, and neither do your children.
You can make use of the numerous short-term courses on financial management and investment. With online sessions and video lectures, you can gain more insight into how the world of money works from the comfort of your home.
Enrolling your child on one of the financial management courses will keep them abreast in financial matters. Thus, when they start earning, they can be more prudent with their money.
4. Recalibrate Credit Card Spends
A credit card is a useful tool, especially in case of emergencies or large expenditures, and it comes with a bonus. It is also one of the most easily misused financial tools in your pocket. If you use your credit card prudently, it can help you improve your savings and lifestyle. However, if you end up spending without checks, it can easily set you in a financial trap.
The best way to use your credit card is to have your budget divided into two parts:
Cash Expenses Only – This is for those necessary expenses where your credit card may not work, such as vegetables, small vehicles, household repairs and similar small expenses.
Credit Card Only – For the expenses which allow you to use a credit card, use the credit card for them. Also, keep the money from your savings account aside in a liquid fund or short-term fixed deposit. You can later use this money to repay the Credit Card dues while you earn some interest on this money.
The best way to use a credit card is when you already have money in your savings account, and you need to spend it on a specific goal. For example, let’s say you want to buy large electrical appliances for your home, and have accumulated enough money already.
You can use your credit card for the transaction, earn payback points and later use the collected money to pay off the credit card dues.
5. Plan to Pay off Expensive Debts
If you have a personal loan and similar debt on your balance sheet, you should plan to repay the debt as soon as possible. The simple reason behind this goal is that these debts usually charge a much higher rate than you can safely earn on your investments. Thus, these debts are actually draining you financially, rather than helping.
With any type of bank loan, you can start prepaying after your sixth EMI. Thus, consider paying something extra from your seventh EMI onwards to reduce your due amount faster.
With these 5 financial management steps, you can ensure that to are better prepared for any emergencies in the future. Also, you will be in a much stronger financial position over the years.
Conclusion
Smart financial management begins with preparation, discipline, and ongoing learning. By reassessing your contingency plans, budgeting holistically, and managing credit use wisely, you create a safer and more sustainable financial future for your family. These practical steps can help you reduce financial stress and build long-term security in 2025 and beyond.
Glossary
Sum Assured: The guaranteed amount paid to the nominee in case of the policyholder’s demise.
Rider: An additional benefit that enhances a term insurance plan, like critical illness coverage.
Term Insurance: Term insurance is a type of life insurance that offers financial protection for a set period.
Mutual fund: A mutual fund is a pool of money that is invested in stocks, bonds, and other securities.
Financial Dependents: Family members who rely on the policyholder’s income for their financial well-being.
Disclaimer - This article is issued in the general public interest and meant for general information purposes only. The views expressed in this blog are solely those of the writer and do not necessarily reflect the official policy or position of Canara HSBC Life Insurance Company Limited or any affiliated entity. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained in the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. You should consult with a qualified professional regarding your specific circumstances before taking any action based on the content provided herein.
