Summary of this article
Diwali is a good time to take a fresh look at your finances and get a few things in order.
There is no need to leave everything until March. A few timely decisions now can make the rest of the financial year easier to manage.
From tax planning and clearing debt to reviewing investments and preparing for retirement, here are 10 things worth checking before FY27 comes to a close.
Diwali is traditionally associated with fresh beginnings. Families clean their homes, make big purchases, review their finances and set aside money for the year ahead. But while the festive season often brings attention to spending, it is equally important to look at what happens to the money that remains.
With the financial year ending on March 31, 2027, November is a good time to take stock of your finances. There are still several months to correct investment gaps, review insurance cover, reduce expensive debt and get your tax planning in order. Waiting until February or March can leave little room to make considered decisions.
This year also calls for some additional attention because the Income-tax Act, 2025 came into force on April 1, 2026. While the broad tax framework has been retained, the provisions have been reorganised, and taxpayers need to familiarise themselves with the new law.
Here are 10 money moves worth considering this Diwali.
1. Revisit Your Tax Regime Before Making Fresh Investments
One of the first things to check is whether you are paying tax under the right regime. The new tax regime continues to be the default, but eligible taxpayers can opt for the old regime.
The two regimes work differently. The new regime offers concessional tax rates but does not allow most of the familiar deductions and exemptions available under the old regime. These include deductions for eligible life insurance premiums, provident fund contributions, specified tax-saving investments and health insurance premiums.
If you have a home loan, make contributions to the provident fund or pay premiums for health insurance, calculate your tax liability under both options before deciding.
Do not buy a financial product simply because it offers a tax benefit. First establish whether the deduction is available under the regime you have chosen and whether the investment makes sense for your financial goals.
2. Complete Your Tax-Saving Investments, But Avoid Last-Minute Purchases
If you are following the old tax regime, the remaining months are a good time to check whether you have made the most of the tax deductions available to you.
Start by adding up your existing contributions to EPF, PPF, life insurance premiums and other eligible investments. You may find that these already cover a large part of the deduction limit.
However, do not rush into buying an insurance policy or investing in a product you do not understand just to reduce your tax bill. An investment should fit into your financial plan even after the tax benefit is taken out of the picture.
Also remember that the familiar deduction limits and conditions need to be checked against the provisions applicable under the new tax law.
3. Give Your Retirement Savings A Fresh Look
Retirement planning is not something to put off until you are close to 60. If you are in your 30s or 40s, you have more time to build a retirement corpus and can plan your investments accordingly. Those nearing retirement, meanwhile, need to take a hard look at whether their savings will be enough to maintain the lifestyle they have in mind.
Check how much you are putting into the NPS, EPF and other retirement schemes. If you invest in NPS, also review how your money is divided between equity, corporate debt and government securities. The allocation should reflect your age, how much risk you are comfortable taking and the number of years left before retirement.
Eligible employer contributions to NPS can also offer a tax deduction under the new regime, subject to the prescribed conditions and limits. This is worth discussing with your employer, particularly if your salary structure allows an employer contribution.
The objective should be to build a retirement corpus that can support regular expenses, healthcare costs and unexpected financial requirements rather than merely accumulate a large figure.
4. Check Whether Your Health And Life Insurance Cover Is Adequate
A medical emergency or the loss of an earning member can upset even a carefully constructed financial plan. Diwali is a good time to review whether your insurance cover has kept pace with your family's needs.
Start with health insurance. Medical costs have increased over the years, and a policy bought several years ago may no longer provide sufficient protection. Check the sum insured, room-rent restrictions, waiting periods, exclusions and co-payment clauses.
If you have a family floater, assess whether the cover is adequate for all members. A separate super top-up policy may help increase the overall protection without requiring you to pay for a very large base policy.
Life insurance needs a similar review. Calculate how much your family would require to meet regular expenses, outstanding loans, children's education and other commitments if you were no longer around.
Term insurance is generally a more straightforward way to provide financial protection than combining insurance and investment products. Also check whether your nominees and policy details are up to date.
5. Build or Replenish Your Emergency Fund
Many households have investments in mutual funds, fixed deposits and property but do not have enough readily accessible money to deal with an unexpected expense.
An emergency fund should ideally cover at least six months of essential household expenses. Keep the required amount in a savings account, sweep-in deposit or other relatively liquid instruments.
Do not put the entire emergency corpus into equity mutual funds or long-term deposits carrying withdrawal restrictions. The purpose of this money is not to generate the highest possible return. It is to ensure that you do not have to sell investments at an unfavourable time or borrow at high interest rates when an emergency arises.
If you have used some of your emergency savings during the year, make replenishing them a priority.
6. Reduce Expensive Debt Before Taking On Fresh Liabilities
Festive sales and easy EMI options often make big-ticket purchases look affordable. Whether it is a new car, a bigger television or a home makeover, there is always something on offer. But before signing up for another EMI, take stock of the loans you are already paying off.
Credit card dues and personal loans, in particular, can be expensive. If a good part of your salary is going towards servicing these loans, it may be worth clearing them before putting more money into investments. The interest you save on high-cost debt is a benefit you can count on, unlike market-linked returns.
Write down all your outstanding loans, the interest rates and how much you pay every month. Start with the loans that charge the highest interest, without missing payments on the others.
Also look at your home loan. If you have some surplus money, check whether you can use it to pay off part of the principal. This can be particularly useful in the early years, when a large part of your EMI goes towards interest. Even an additional repayment can bring down the loan burden and, in turn, the time you spend repaying it.
However, do not exhaust your savings to repay a relatively low-cost loan. Retain sufficient liquidity and compare the interest savings with the return you may reasonably expect from alternative investments.
7. Review Your Mutual Fund Portfolio Instead Of Chasing Recent Winners
A Diwali portfolio review should begin with your financial goals, not with the mutual funds that have delivered the highest returns in the past year.
Check whether your investments are spread sensibly across equity, debt and other asset classes. If equities have performed strongly and now account for a much larger share of your portfolio than intended, consider rebalancing.
Take a closer look at the mutual funds in your portfolio as well. You may be holding several schemes that invest in much the same stocks. Adding more funds does not always mean better diversification, so check whether each one has a distinct role in your portfolio.
If you have been investing through SIPs, see whether the amounts still make sense. If your income has gone up, you could consider stepping up your monthly contributions.
Avoid stopping equity SIPs simply because markets have corrected. Equally, do not increase exposure recklessly after a strong market rally. Investment decisions should be linked to the time available to achieve a goal and your ability to tolerate losses.
8. Examine Capital Gains and Book Profits Carefully
Investors who have sold shares, mutual funds, gold or property during the year should calculate their capital gains and understand the resulting tax liability.
This is also a good time to examine whether some investments should be sold or rebalanced. You can also look at whether some of your investments are sitting at a loss. Selling such investments, where appropriate, can help set off capital losses against capital gains and bring down your tax liability. This is known as tax-loss harvesting.
But don't sell an investment just because it is showing a loss. First ask whether the asset still has potential to recover and whether you would want to continue holding it. Brokerage, other transaction costs and tax rules also need to be factored in.
Remember that tax treatment is not the same for all investments. Equity shares, equity mutual funds, debt funds and property have different holding periods and capital gains rules. The date on which you bought and sold an asset also matters.
Keep your purchase and sale records, along with details of expenses and any losses carried forward from earlier years. If you have made several transactions or have a sizeable portfolio, it is better to get a tax professional to review the implications before selling investments purely for tax reasons.
9. Check Nominations and Bank Accounts
Financial planning is not complete unless your family can access the money and investments you have accumulated.
Go through the nominee details across your bank accounts, fixed deposits, mutual funds, insurance policies, provident fund and demat accounts. These details are easy to overlook, but can cause problems for family members later. Make sure they are updated, particularly after a marriage, the birth of a child or the death of a family member.
It is also worth checking whether you have old bank accounts, forgotten deposits or investments lying with different institutions that your family may not even know about.
10. Set aside money for the next year's big expenses
Finally, look beyond March 31. The beginning of a new financial year often brings expenses that households tend to underestimate.
Expenses such as school fees, insurance premiums, annual subscriptions, property tax and holiday plans can throw a monthly budget off track if you haven't planned for them. Loan repayments and other regular commitments add to the pressure. Homeowners should also keep some money aside for repairs, maintenance and unexpected expenses related to the property.
Take a look at the big expenses likely to come up over the next year. Work out how much you will need and start putting aside a little every month, rather than scrambling for money when the bills arrive.
Short-term requirements should be kept in relatively stable and accessible investments rather than exposed to equity market fluctuations.
If you are planning to buy a house or car, calculate the total cost, including registration, insurance, maintenance and other charges, instead of looking only at the down payment or EMI.
Make Financial Discipline Part Of The Festive Reset
Diwali spending is often driven by emotion. A new appliance, a family holiday or a long-awaited purchase can make the occasion special. There is nothing wrong with enjoying the festival, provided the spending does not undermine longer-term financial security.
The more important task is to enter the new calendar year and the final months of the financial year with a clear picture of where your money is going. Review your investments, protect your family against financial shocks, reduce expensive debt and complete the necessary tax-related work in time.
You do not have to make all 10 changes at once. Start with the areas that need immediate attention and work through the rest over the coming months.
A financially sound Diwali is not about how much you invest or spend during the festive season. It is about making sure that today's decisions do not become tomorrow's financial burden.
