Do you waste your money like this?

We all strive hard to make money and it is very important that we learn how to manage it or else, after a period of time, you will come to an exhaustion point where even after spending so many years working hard, you still lack enough money to take care of your needs. It is a very painful situation to be in, trust me.

With little adjustments in our lifestyle and spending habits, we can at least have the satisfaction that we didn’t spend money without a genuine need. The guilty feeling that you have after splurging your money on something unnecessary and unworthy would continue to plague you for long. I want to take you through certain things that we all do and thereby waste money without even bothering about it.

1. House interiors and furniture – I agree that a decent looking interior and comfortable furniture is a necessity, but the problem arises when you go beyond your means and try to set up your home like the one which you see in the movies or mimic the homes of movie stars and industrialists. Never try to make your home like a corporate office. You will waste a lot of money for sure.
2. Eating at high end restaurants – Taste and quality of food is very important and not the setup in which you eat, though a decent environment is desirable. The problem is when you visit one of those hi-fi restaurant that sell a 50 rs food item for 300 rs. They don’t charge for the food but for the ambiance and interiors for which they had invested a lot. You can do this once in a while, but not regularly.
3. Costliest branded clothing – Decent looking and fitting clothes are a pressing necessity. Many of us go for branded clothing for the consistent experience they provide like the fitting, quality etc. Have you realized that there is a low end as well as high end priced clothes in the same brand itself and which one do you end up buying? You may wear a pair of dress not more than 50 times before throwing it off and if you end up paying a huge sum of money on that, it is never going to help your financial cause. An exception can be considered when you purchase clothes for special occasions which is once in a while.
4. Junk food – All the money that you spend in the Quick Service Restaurants aka junk food is injurious to both your pockets as well as health. In one way, your money goes down the drain very quickly and on the other hand, you equip yourself with non-communicable diseases that will make sure you spend the remaining money for your hospital visits. Is spending too money on junk food worth a case?
5. Costliest gadgets – Again, look at it from the necessity aspect rather than the brand and pricey nature. Don’t think that your status increases if you possess a gadget of certain brand and price. Be wise with your investment on electronic gadgets as their value depreciates very fast
6. Cosmetics – Look at the need and spend accordingly. The market is infested with plethora of fairness creams, moisturizing lotions etc. If you visit a supermarket, you are tempted to purchase everything in this segment as if it will change your appearance in a whisker
7. Purchases at shopping malls – You are actually paying for their infrastructure investment rather than for the value of the goods you purchase
8. Marriage – Throwing away money just for the sake of attracting others and maintaining status in the society. If you plunge deep in debt, those who ate at your family wedding will laugh at your fate
9. Jewels – In India, women are in fact valued by the amount of jewels that they carry on themselves. Is this really needed? Always remember, too much of anything is good for nothing
10. Automobiles – You need to travel from location A to B in a safe and comfortable manner. Anything above this is a luxury. Think twice before going for a loan on that car that you have decided to purchase to show off to your neighborhood!

Let me close this with a Warren Buffet masterpiece

“If you buy things you don’t need, then you will have to sell things you need”
                        -Warren Buffet

Simplified Tax filing with H&R Block

It is July and for those who pay taxes every year, this is a period of time where we become busy with our Form 16 and other associated tax filing activities. Earlier, we used to seek the help of some professionals who would file the Saral form for us for a fee. Gone are those days now and with the introduction of E-Tax filing through https://incometaxindiaefiling.gov.in, anyone can file their tax online.

I would like to introduce to you an even easier way through which I filed my taxes this year and that too absolutely free of cost. H&R block is a world wide tax filing company operating in almost all the countries of the world. They have an India specific site https://www.hrblock.in, through which all of us in India can file our taxes very easily.

All that you need to do is register in this website, fill up the data that they ask for (usual data about yourself), upload your form 16 and associated documents if any, and wait for their agent to do the filing for you. It works like a magic. They have a great chat mechanism as well as email and SMS alerts.

I had to file my taxes with two form 16 documents this year as I switched companies. All I did was enrolled in the portal, uploaded both my form 16 pdf files, and submitted it. Within 15 minutes, their agent called me for confirmation. The very next day, he prepared the tax summary and asked me to authorize it for tax filing. Once I authorized, in the next 6 hours my tax was filed and the ITR file was ready to be downloaded.

They also arrange to send the hard copies to Bangalore through speed post. All of this at zero cost. A very commendable service indeed. I would highly recommend everyone to try this out. They have a very good help and FAQ section to guide you through the tax filing process.

Young couple – Plan your finances

By Suresh Parthasarathy

I am 27 and employed with the Central government; my fiance works in a PSU bank. I have been provided health cover by my employer. Please suggest a plan to help me meet my goals.

Mittal

It is heartening that you want to plan for your goals early on. Since all your goals, barring the one to buy a home, are for the long term, plan carefully. Budgeting can help you achieve your goals comfortably.

The most common mistake newly weds make is that they hurry into buying a home.

For instance, if you wish to buy property for 30 lakhs and avail a loan of 25 lakhs for 15 years, assuming interest of 9.85 per cent, your monthly EMI will be ?26,630. Even if your wife is eligible for a loan at 8 per cent, the EMI will be ?23,900. And you will end up having no surplus to spend on other things.

So, you could consider buying land in an upcoming area, which can be sold after five years to buy a flat. This will reduce your loan burden too.

It is too early to plan for children’s education. But, you can still make a long-term investment for, say, 15 years, the proceeds of which can be used for other purposes too.

Invest ?3,000 monthly in an instrument that can fetch 12 per cent annually; you will have ?15 lakh at the end of 15 years. You can follow asset allocation of 50 per cent in equity and debt to start with and can gradually increase equity portion. Buy a term cover for ?50 lakh each.

The author is a famous Certified Financial Planner and is the CEO of MyAssetsConsolidation (www.myassetsconsolidation.com)

 

10 practical tips to cut down on daily expenses

1. Always think twice before spending money on anything. If there is a way to avoid or postpone spending it at that instant, try that out.
2. Resist the urge to spend money on anything immediately. If you delay your purchases, there is a great likelihood that you will end up not purchasing unnecessary things
3. Try to reduce the frequency of eating out. As inflation and taxes hit the roof, restaurants pass on these expenses to the customer. If you are eating out 6 times a month, try reducing it to 3 times
4. Don’t use your car for short distance frequent travels. Try to walk or use a bicycle. This will keep you fit as well as make you spend less on your fuel.
5. Try to use public transport as much as you can. This too will help to reduce the expenses on fuel as it is getting costlier day by day.
6. Gulping three or four cups of coffee everyday in your office cafeteria would burn a hole on your pockets. If possible, take coffee in a thermos flask and savour it. The same applies to food too. If you can take food from your home, you would save lot of money by cutting down your spending in the office food court
7. While purchasing groceries, vegetables and fruits, make a list on how much you would need for the entire week/month. Try to purchase it from the wholesale market as it would be at least 30 to 40% cheaper than the retail market. That is a huge amount to be saved!
8. Don’t spend too much money by going for branded commodities. These days, it is important to see the worth of the material than the brand. If you can get a good pair of shoes at 50% price of the most sought after brand, go ahead and purchase it. You get 50% discount immediately.
9. Never purchase something by getting hooked by the advertisements. These days, advertisements seem to be little unrealistic and they paint a wrong picture of what it is in reality. It is better to avoid the “Take 1 get 1 free” offers.
10. Reduce your electricity charges by switching off the electronic and electrical gadgets when they are not in use. If you can cut down your electricity charges by 20%, you are in for a big saving.

5 sure shot ways to come out of an existing debt – Worth trying

Everything is becoming too instantaneous in this world these days, with the advancement of technology. Things like instant coffee, instant food, instant relationships, instant credit and what not?.  Gone are the days where you order for something and wait patiently for weeks or months before you could actually lay your hands on it. The more instantaneous everything in life becomes, the more humongous is the trouble that comes along with it.

Instant gratification is a phenomenon, where one tries to achieve everything in life without much planning and forethought. It is just quenching that underlying emotional thirst at that instant without thinking about the future.

It applies to each area of our life, and the most important one is finance. Think how many times we have been trapped in debt just because we wanted to purchase or invest in something instantaneously without thinking. Just when we do window shopping, a very cute LED television or an awesome attire attracts us. Though we don’t have the funds to purchase it on our own, we go for hire purchase with credit cards just to satisfy that trigger for an instant pleasure.

After a few days of taking it home, we are engrossed with the worry about clearing the incurred debt. Sounds familiar? I have experienced this many times in my life, where I purchased things that attracted me on the first sight but found them to be of no use later. Believe me it is really painful and it makes you a slave to debt and takes away your freedom.

But, take heart, nothing is over until we give up. If you are trapped in such a situation, just make a master plan to come out of it. Follow these steps to help yourself out of the dangerous debts that you have heaped upon yourself

1. Avoid another unnecessary purchase at least till the existing debt is cleared off. It could be a very small step like reducing the frequency of eating out.

2. Try to mobilize funds to clear off the high-interest loans first, followed by the low-interest ones and in that order complete paying all the loans.

3. Put a check on your spending habits by making sure you don’t splurge onto anything unnecessary. Purchase only things that are absolutely vital.

4. Try to meet up a financial counselor and take professional help. They would have a lot of ideas specific to your situation

5. Don’t replace any of your existing items like car, furnitures, TV or other electronic gadgets, if the existing ones can be used for some more time. Hold off that urge to buy it immediately.

So, the next time when something flashy captures your attention while walking in your favorite shopping mall, make sure that you have the funds for it, even before having a second look at it!

SUV desire and the decision

I am driving the third car in my life which is a Maruti Ritz. I had two cars before and both were from the Maruti stable (800 and Esteem). I purchased my first car when I was 22 years of age, even before I had my own home, or a proper place to park it. Too ambitious some would say, and absolutely foolish a few others would say..

It took me 3 years to close the loan, and the moment I closed the car loan, a desire to own a sedan started tickling my thoughts. I was very young, little immature, brimming with confidence, had high hopes on a very successful and high paying career ahead in IT, and with all these motivating factors, I went ahead for a costly loan and purchased a sedan which I drove for the next 4 years, but could not complete the loan. The car started giving lot of problems, and the maintenance was getting very costlier. I decided to dump it, and go back to a hatchback, and that’s how I purchased my present car.

I have driven my Ritz for 4 years successfully and have taken it to Bangalore, Mysore, Alleppey, Kanyakumari, Tuticorin, Ooty and many other places. By the way, I closed this loan 6 months back. They say the desire for lavishness and luxury secretly stays within us, though we may showcase ourselves to the outside world as one who practice austerity. I was very much convinced to change the car, and this time for the biggest of the lot, an SUV preferably a Mahindra XUV 500. Honestly, I don’t have space to park this big one in my house, but even then, desire has no limits.

As I am a little mature these days, I started discussing this with my family and friends. My wife never has an appetite for cars, but this time she wanted to go for a new one (her logic for this..I would waste money in unnecessary things, if I have free flow of money in my hands, and at least I won’t do crazy stuffs if I am locked down with EMI’s).

After a rigorous thought process, I decided not to buy one. My brother too advised me not to go ahead as he had seen me suffer earlier with the pain of paying those EMI’s for the car. As I was driving down in my Ritz today, I started to realize how foolish that I have been at times. The need for a car is to take us from place A to place B, and if the current set of wheels is good at doing that, and that too when you absolutely own it (if it is on loan, the reality is that the bank owns it!), then it is the best vehicle to own.

Let me put on my philosopher’s hat and offer a few words of advice for those souls wanting to cruise on those high end cars and SUV’s. Go for it, if the following things apply to you.

1. You have a large parking space

2. You absolutely love to drive, that you wont get annoyed with the frustrating traffic

3. You have sufficient money at your disposal to purchase it, or in case of EMI’s, job security till the payment tenure

4. You have money to maintain it

5. And most importantly, your family, friends and well wishers are happy about your purchase.

Remember, there is no point in purchasing one through high interest loans, and not being able to enjoy anything else in life because of that.

Save money for yourself

I want to start this post with a question. What is the first thing that we do with our salary each month?. For most of us it will be somehow an expenditure like paying for monthly groceries, rent for house, renewal of insurance policies or payment towards the loans in the form of EMI’s or credit card bills. Sounds familiar ? Whatever may be your answer, if the first thing that you do with your salary is not saving something for yourself, then your financial planning needs a big time rejig.

All of us will agree that we toil very hard to earn our salary or income. Unless you are someone with huge wealth to take care of the next few generations, each and every person on this earth goes through a financial struggle at some point of time in their lives. It is high time that we reward ourselves first, for our hard work by saving some money for our future needs. The reason that anybody works everyday is to live for the present and save for the future. Most of the people end up never doing both. They neither live well for now nor save for the future. Then what is the point of earning money every month?

We will always be fighting debts and EMI’s all through our lives, thus making our living miserable. It doesn’t matter how much we earn, if we don’t plan to save some money for ourselves in order to have a bright future and a good retired life. We could see many elderly people suffering in their retired life as they did not plan their post retirement life well. Some would have thought that their kids would take care of them, but eventually it might not have happened. Whatever may the case, it is wise to save some money for our self.

How can someone do it systematically every month? I would give a few simple tips.

Make it a habit to take at least 10% of your monthly income and invest it in a systematic manner. If you are a person with a good amount of appetite for taking risks, then it makes sense to invest your money in stocks or mutual funds. If you are one of those who wants to play the game safe, then go for fixed or recurring deposit schemes. Either ways, Make it a point to save regularly and with discipline.

If you can take the 10% of your income and save it regularly, then you will be surprised to see that you are still able to manage all your monthly expenses with the remaining 90% of your income that is left. This is magical, and you can test and approve it. What happens to this 10% that you save? Well, they say that small drops make an ocean and that saying is very much applicable to this. This small 10%  that we save every month will keep paying us back during our old age in the forms of interests and returns. Why don’t we try to take a shot at this?