11 Worst Financial Mistakes You Can Make in 30’s

After a decade of trial and error and growth, most people learn to overcome the most common financial mistakes as they turn 30. But as they enter a new decade, they will be welcomed with new challenges.

Here is the compiled list of the worst financial mistakes that anyone can make before turning 30, a key time in anyone’s development and future, as it is often the time to buy a home, build relationships, start a family, and save for retirement.

1. Saving too much in wrong products

Investing is important, but people in their 30’s often overemphasize their pension funds and other retirement savings plans, and put savings aside for other large purchases.

But there are other important purchases on the horizon, especially if you’re having children or thinking about having a house, for which you’ll need savings.

Put money into a pension plan, but don’t forget to set aside money for other things, such as a house, a car, a good vacation or your children’s education. It is recommended setting up different savings accounts for specific purchases. Take a look at the options your bank offers and see if it allows you to create different savings accounts.

2. Prioritize your children’s education over your own retirement

While focusing too much on the pension plan is a common financial mistake, not saving enough money for retirement is also a common problem, especially when child’s education expenses come into effect.

Obviously, your children’s education is important, but the number one priority at 30 – even if you have a family – should be retirement. Think long-term. If you don’t set aside enough money for your own retirement, your children may have to help you in the future, which could end up being more expensive in the long run than student loans would be.

Make sure you save fast for a decent retirement before you start saving for college. Once you get that rhythm, you have enough extra funds and you can and should save for college.

3. Neglecting insurance

Insurance in general – health, life, home and disability – is often given lowest priority for two main reasons: “It’s not a fun thing to talk about, so it’s often delayed off longer than it should be. “People often don’t have good insurance advice. They are often advised to just get coverage – no matter what kind, just get some – but years later, when they get close to 50 or 60 and something happens, they find they don’t have the right coverage.

It is advisable to spend time studying insurance plans or talking to a trusted advisor.

4. Not buying long-term disability insurance

One type of insurance that is neglected more often than the rest is long-term disability coverage, but not having it can be extremely risky. Disability insurance is designed to provide income in the event of a disability that prevents you from working, which is more likely to happen than many people think. It is estimated, according to the Social Security Administration, that more than 25% of those who are now 20 years old will suffer some form of disability before retirement.

Many people will buy life insurance that covers in the event of death. But they don’t think about the possible disability – especially if it’s not covered by your company – and that’s a bigger risk. You’re not dead, but you can’t work and you can’t do anything to avoid bankruptcy.

5. Not talking about money before you get married

It’s no fun or simple conversation topic, but talking about your personal finances, spending habits and financial plan with your partner is crucial. Couples often have this conversation too late, if at all. When they finally sit down to discuss it, there is already a great deal of emotional involvement in the relationship, which causes many couples to play down important financial differences.

The conversation must take place and sooner the better. First, you need to understand your partner’s financial background, which will help you understand how he or she makes financial decisions. You can then decide whether to keep your finances separate, if you both work; or whether to combine them, and then you should agree on how to spend together.

6. Spending too much on a wedding

Too many people are spending an absurd amount of money on organizing a disproportionate wedding. Today, an average wedding in the United States costs a staggering $35,329 (30,000 euros).

It is recommended to plan a modest wedding, and use the remaining money as an advance on a house. Organizing a big wedding for less than $5,000 is possible if you are careful with your budget.

However, it’s a very personal decision: whether organizing a big wedding is important to you, all right. You just have to start saving soon.

7. Spending too much on the first child

When the first child is born, new parents tend to overspend on high-end cribs, bottles, clothes and baby accessories. The spending problems we usually see in 20-year-old’s are moderated until the children are born and then they explode.

You should raise your child in a comfortable environment, but think twice before spending thousands of dollars on a branded cart that leaves you without savings, when other unexpected expenses are likely to arrive.

8. Spending too much on cars

Another area in which experts see a serious financial error is overspending on cars. People get bored of cars fast. They always want a new car and have to pay for it. But car is a rapidly losing value asset. You don’t want to invest money in something that won’t be worth anything after a few years.

So it is recommended to keep the cars for at least 10 years. After you buy a new one, make sure you finish paying for it in five years, so you can spend that money on other savings for the next five years. After 10 years, if you go to the dealer again and if you have taken care of your old car, you can get a good price for it, which will help you pay for the next one.

Another option is to use leasing. You can decide if it is a good option for you or not. Also, consider giving up a new car and buying a second-hand one, which could save you an significant amount.

9. Taking a master’s degree for wrong reasons

A master’s degree is usually quite expensive, so make sure you go back to school for the right reasons, especially if you’re paying for it out of your own pocket.

It should certainly help you progress in your career. Let’s take an example of MBA. If you don’t know what your goal is after getting the MBA, you’re not doing the right thing, considering the fact that cost of MBA is very high. If getting the MBA helps you get a position that enhances your long-term career, then it’s the perfect solution.

It is also recommended that you earn while you learn. Do not stop working while you study, if possible.

10. Taking a job with short-term money in mind

When you’re in your mid-thirties, you’re preparing to enter your higher income years, and it’s important to prepare for this stage of your life.

At this point, you shouldn’t take jobs with short-term money in mind. You must choose a job that prepares you for much more money in the long run.

11. Optimistic of having more money in the future

While optimism is a good and must to have quality, too much optimism can be dangerous, especially when it comes to money.

People tend to assume that they will make a lot more money when they reach 40. This is one of the most serious and common mistakes in each person’s personal finances.

The basic rule should be to live below your means. If you can’t afford to buy a new car, then buy a second-hand car with guarantee. Saving first’ should be your motto: save for retirement first and spend with the remaining money. People tend to do just the opposite thinking, I have to buy this, this and this, and what’s left, I’ll save it. Pay for your future first, and make sure your present is secure.

How to finance your marriage without ruining yourself?

D-Day is here! You will finally formalize your life with your partner, with whom you have shared your life for many years. Of course you want to make this day memorable with all your guests, a day never to be forgotten. It is true that such an event can cost you quite a bit, but you are the only one to decide its magnitude.

So – how to finance your wedding without ruining yourself?

Compare different options to save money

When preparing for your wedding, it is wise to set a budget in advance to determine exactly what you can spend. This will help you avoid money disputes with your partner/family during the preparations. Marriage costs vary according to the people, locations and situations. Once you have set a reasonable amount, you will already be halfway through your preparations.

Next, you need to analyze the different expenses within your budget. Here are some of the key events/things you can save by being creative and thinking outside the box:

  • Location: Do you have at your disposal a beautiful garden (belonging to you or your relatives)? With the help of your friends and family, you can decorate this place and turn it into an ideal place to organize your wedding. In summer, a wedding tent with a few canvases can create a very intimate and pleasant atmosphere.
  • Catering: You can go (too) far in what you serve your guests, however, they will come for you and not for the food or drinks served at your wedding. Feel free to be creative, and choose a menu that suits you. For example, if you are a fan of Chinese food items, you can decide delicious Manchurian, etc. with non-alcoholic beverages. It will leave your guests with an unforgettable summer memory.
  • Wedding clothes: New wedding dress collections are generally on sale or available on rent. Both the options are good depending on the utility of the dress after the marriage. By renting, you can offer yourself the dress of your dreams at lowest price!
  • Honeymoon: Have you ever thought about the miles saved with your credit card? Thanks to these, you can finance all or part of your trip. If you want to save money, extend the honeymoon to a later date when travel season is off.
  • Number of people: The price of a wedding, will ultimately depend heavily on the number of people you wish to invite; the more there will be, the more expensive the wedding will cost you. You can also choose to keep your wedding intimate and private.
  • Events: If cost is a concern, limit the number of events during your marriage. Skip bachelors party or DJ, depending on your financial situation.

Savings or loans?

The best way to intelligently finance a marriage is to use your savings. To get such a sum, it is better to start saving several years in advance. Feel free to compare financial institutions to find the loan that’s right for you.

If your savings are not enough, you can cover the rest of the expenses with a loan. However, remember that it will also cost you money: you will have to pay it back in monthly installments, over the next few years and with interest. The most appropriate loan for a wedding is the personal loan. The latter does not require any justification as to the destination of the borrowed funds; the monthly payments and the interest rate are fixed in advance. You can also take loan through peer lenders. Compared to banks, eligibility criteria is not strict and you can bargain on interest rates.

Save on your budget, not your dream wedding

We have already given you some tips to reduce the costs of your wedding, here are some additional tips:

  • Choose the best location, not the most expensive or prestigious one!
  • If money is a concern, invite only your family and close friends, a successful ceremony does not depend on the number of people present.
  • Offer refreshments and snacks or a personalized menu.
  • Don’t choose the most expensive wedding car, but choose to rent a beautiful car from your family or friends.
  • Melt your old rings to get your rings.
  • Weddings on weekdays are generally cheaper than weekends. Wedding price can also vary depending on the day and time of day! Do not hesitate to take this into consideration.
  • Does anyone you know have a passion for photography? If so, you can save good money on hiring a professional photographer by hiring him over a professional company.
  • Do you have a friend who loves playing DJ? You can also save money by leaving him in charge of the musical entertainment for your evening.

Try to imagine how your wedding should be, and customize it to your choice keeping in mind your financial situation! You can fully enjoy this moment with all the people present at your wedding: your partner, your family, your friends, in short, all the people you love because it will be your D day!

11 Financial Decisions Every Wife Should Ask Husband to Make

Financial adversity can strike anyone at anytime and at any quantum. And when it strikes the whole family’s future start looking bleak. And especially in case of women who are totally dependent on husband’s income the impact is severe.

There could be many reasons for financial adversities such as:

  • Death of husband who is single breadwinner of the family
  • Partial disability of the lone earning member of the family
  • Divorce
  • Medical problems

Few of the financially stressful situations for a homemaker in an event of husband’s death are:

  • Children’s education and marriage
  • Repayment of any ongoing loans or credit card bills. Most importantly home/car/personal loan.
  • Medical treatment

In order to have a financially secured future, women should insists her husband to make following financial decisions as early as possible. And husband, at the same time should practically think about these decisions and act swiftly.

Check out home loan for women.

List all the investments: It is every women’s right to know all the investment done by her husband. Be it stock market, mutual funds, fixed deposits, etc. At the same time it is essential for a women to have complete understanding of investments, its objective, returns, etc.. This knowledge will help when the husband is no more so that women can take complete ownership and make right moves.

Understand importance and meaning of every investment: Not everyone has financial acumen to understand details of investments and its confusing terminologies. As these are the concepts which are difficult to understand. However this does not mean that you should not involve your wife in matters related to investments. Although she may not understand everything but she will understand something which will definitely come to her help in your absence. So it is the wife’s duty to get acquainted with basic terminologies. And remember knowledge gained is never wasted. It can help in someway or the other. If not now, but definitely it will help in future.

Get yourself added as a nominee: Individuals often make a mistake of not adding nomination. Make sure wife gets her name added as a nominee in bank account, insurance policy, and all other investments such as ELSS, fixed deposits etc. Let’s take an example of fixed deposit when nomination is not made. In this case, family members will have to bear the pain and produce legal heir proof or a succession certification to the respective authority in order to get maturity amount.

Homemaker can earn money from home through these 26 authentic ways.

Open joint bank account: Another important financial decision women should ask her husband to make is – open bank account jointly. Having jointly held account with partner has many benefits such as keeping track of all expenses, both can operate the account. And most importantly in case of death, the rights can be transferred easily. There are many types of joint account in India. But husband and wife should open (Either or Survivor) type of joint account. And it is highly recommended for newly married couple to open such type of account right after marriage.

Buy health insurance: No matter how healthy a family eats or lives, health problems are inevitable. And buying a medical insurance is the most essential for every family. A single hospitalization can suck entire life’s savings. And especially when the only earning person in the family gets hospitalized then entire onus comes on wife. Having sufficient health cover can protect your savings as the insurance company will pay for the pre and post hospitalization expenses. And very small amount will have to be paid by the family.

Buy term insurance plan: What will happen in the absence of the breadwinner of the family? Who will take care of children’s education or marriage, day to day expenses? This is where term insurance plan comes to rescue. In an event of death or critical illness to the earning member, the insurance company protects the family by paying out the sum assured to the family. This assured money can then help in meeting expenses of various life events. This is the reason every homemaker should ask husband to purchase term insurance cover.

Buy child plan: Everyone wants their child to get best education. However with rising cost, it has become increasing difficult to provide such type of education. And in the absence of earning member, this becomes impossible when wife is not working. However child insurance plan offers periodic payments as specified under the plan and all future premiums are waived off as policy continues to remain in force. So wife should actually get this very essential plan purchased.

Write a will: All of the husband’s assets should fall into the right hands after his demise and most importantly in a smooth manner. Assets could be – house, shop, company, gold/other forms of jewelries, etc. Each of your family deserves equal rights to inherit the wealth. And this is when will writing is beneficial. It is therefore the duty of the husband to create the will and add wife and/or children as a beneficiaries. This wealth will then help to meet future expenses of the family. In cases where will is not made, family has to go through legal route and claim the wealth. And this is a very tedious process due to the complexities involved.

Plan investments jointly: Normally wives have conservative thinking when it comes to spending money. So if husband is doing investments aggressively, then best is to decide on making investments jointly. This way, husband won’t end up buying incorrect financial product.

Get access to all documents: Make sure you as a wife is aware of all the documents related to investments, properties, loans etc. If you do not know where these documents are kept or when to use what, then ask your husband to simplify each and every document and its importance. Best is to use digital locker.

Share passwords: This is the most critical thing and requires high level of trust. But being a couple, there should not be a single percent doubt. Sharing of passwords is a key especially when investments are held in electronic form such as equities, mutual funds etc. If husband dies then it will become very difficult for the wife to take a control of them.

So securing the financial future of the family requires trust between both husband and wife. And this most critical aspect should be handled with responsibility by both of them. It is no longer a one person job.

How should single breadwinner plan finances

Financial planning for the individual with following scenario:

Annual Income: 11. 50 lakhs per annum
No. of dependents: 3
Any insurance taken: No
Group cover: Yes. But parents not covered.
Any loans taken: Yes – Personal loan.

Insurance is the most important thing such an individual should buy. Here are the recommendations:

Life insurance: If you are the only earning member in the family with dependent – wife, mother and father, the adequate life cover should be the top most priority. Best and the cheapest option is to buy a term insurance.

Personal Health Insurance: In addition to this, you should buy personal health insurance even if the family is covered by employer i.e. group cover. In case you switch to new job where group cover is not provided then your personal health cover will take care. Adding a maternity cover will further benefit. Read more on reasons to buy personal health policy.

Health insurance for parents: If parents are not covered under the group plan, comprehensive health insurance should be purchased. Although premium would be on a higher side but it’s worth putting money to avoid financial setback when anything happens to the parents leading to hospitalization. In such a scenario, insurer will take care of the expenses.

Get rid of debt: Before such a person falls in a debt trap, personal loan should be paid off as early as possible.

Emergency fund: If there is additional cash in the bank account, then the same should be transferred to a recurring deposit account or a liquid mutual fund. Your aim should be to create a corpus of over 2 Lakhs, which will come to rescue at the time of any emergency.

Cut short unnecessary expenses: Start maintaining day to day expense diary and without fail note down the expenses. This way you can know what expenses were irrelevant so that next time you can control spend.

Go Online: If you shop only at physical stores then give a look at online shopping. Buying stuffs online can benefit in the form of cashbacks or discounts. You can create comparison sheet consisting of price of product at store vs. online. If the difference is significant then buy from there.

Increase earnings: Plan to get a job/business which will increase the earning by 20%+ within 2 years. It is the only to way to beat inflation and meet financial goals such as buying house/car.

Short term plan: Large plan of the accumulated savings should go into debt mutual funds and liquid mutual funds if the goal is to buy own house and a car in the coming years. Check out high risk, high return investments.

Medium to long term plan: Once some of the short term goals are met, start investing in equities. This is recommended to beat inflation and for this 40%-50% of the assets should go into equity or equity linked funds.

The most important point is to revisit the goals after 1-2 year and change the investment strategy accordingly.

Diwali 2016: Wealth Creation, Financial Planning for New Year

Diwali 2016 is round the corner and everyone is eagerly awaiting to celebrate various festive days. We buy new things such as clothings, furnishing items and many more and celebrate various festive days with crackers, sweets, and gifts. Lakshmi Puja is considered to be the most important day during Diwali. It helps people to realise the importance of wealth creation and money making. Over years we have been following rituals of lightning fancy lamps, cleaning house etc. to seek blessings of goddess Lakshmi. However not everyone receives the blessings of Lakshmi, which means money. It can due to various reasons no or incorrect investments etc.

We often create financial goals at the beginning of new year but this time let’s start financial planning in Diwali and give a fresh start. And here are some basic wealth creation/management tips for everyone.

  1. List down your goals: This is the first and most important step in wealth creation. And all your financial investments should have a goal.
  2. Emergency fund creation: Always have some amount of money ready in your bank account to be used only during emergency needs.
  3. Buy health insurance: We will first meeting your health goal. One of the most recommended insurance product across the world is health insurance. Not having a proper medical insurance is the starting point for future financial disaster. Rising medical treatment costs can badly ruin your hard earned savings when you don’t have health cover. Moreover India does not offer social security unlike western countries, so buying a health insurance is very important. And when bought at an early age, you will save good amount of money in premiums. So compare and choose best medical cover for yourself and family members.
  4. Buy life insurance: Another insurance which is always recommended especially to individuals with financially dependent family member is life insurance. There are many types of life policies. At the basic level, an individual must have either a term plan or whole life policy. In case of the death of the insured person during the policy term, the beneficiary will receive the sum assured.
  5. Write down spendings: If not daily, atleast make a habit of writing down your expenses every week. Trust me, this works wonders. You will actually come to know unwanted expenses you have made and then take action on cutting those spending next time. For e.g. when you buy something in store and later on you realize the same stuff could’ve been bought at much lower price online, then next time you can compare prices online and offline and save money.
  6. Invest in zero risk but good return investment products: Not everyone likes taking risk with their hard earned money. And it is perfectly fine. After all it’s your money. For such safe investors, investing in no risk and high return investment products is recommended. And this includes, public provident fund, sukanya samriddhi account, national savings certificate, and few others as mentioned in this article.

If you follow atleast above mentioned six pointers, then years down the line you will see the real fruit.

  • Invest in stock market: Many people have negative belief about stock market. They relate stock investment to gambling. If you also think this way, then your mind definitely needs a cleaning. Although for a risk avert individual there are many zero risk and high return investment options. But if you have been staying away from stock market just because you think that it is a gambling then you are keeping yourself away from enormous wealth creation opportunities it offers. Risk and returns are two important factors when evaluating any stock. And by analyzing the past performance, future price of stock can be calculated. If you are not an expert in this field take advice of your broker. It’s their job to guide you, higher the profits you earn, higher are their incentives.
  • Portfolio Cleaning: Everyone must have invested somewhere either equity, mutual fund, fixed deposits etc. And not every investment product will give you the best return. Sometimes you might have to deal with negative returns. Let’s take an example of stocks. People often buy stocks at prices and few months down the line may not see any reasonable returns. In such cases, individuals need to revisit their portfolio and move out of loss making stocks. Although you will make losses but who knows stock price may further slide. Instead move out of such stocks and invest in other stocks or other products. Best is to invest in SIP as mentioned below.
  • SIP Investments: India is a growing market and regular investments over longer duration will definitely make your bank balance green. Investing in systematic investment plan (SIP) regularly as per your convenience, especially in equity mutual funds is surely the most recommended wealth creation strategy. And earlier you start investing higher would be the return compared to individuals investing late. Moreover the minimum amount required to enter into SIP is Rs. 500 which is a small amount.
  • Hire Financial Advisor: Not everyone is an expert in money or financial markets or has time to actively monitor their money and investing at its best. For such individuals, hiring a financial advisor is highly recommended. Their job is to make clients meet their financial objectives such as higher education, children’s marriage, foreign travel etc. Read more on what questions to ask financial consultants.

So best of luck and may goddess Lakshmi shower everyone with good luck and prosperity for the years to come.

13 Reasons Why Financial Advisor is Important

Earning money is very difficult but at the same time how to make use of it to grow exponentially is most important. Normally people think that financial advisors are required by the rich people and with even with small knowledge they can do financial planning on their own. But this is incorrect. Because even if you are able to save and grow money, financial risks can never be minimized, when you do not have enough knowledge of different investment products. So hiring someone who can offer you personalized support is must and that is why you should hire financial advisor.

Listed below are the reasons you need financial advisor:

  1. The person can help you in reducing financial risk and achieve financial goals keeping in mind factors such as inflation, economy etc.
  2. Increasing the returns by keeping risk and return ratio under control.
  3. Creating financial plan for different phases of life such as child’s birth, education and marriage. Each of these are explained below:
  4. Child birth: After child is born, the first thing you should do is consult a good advisor who can guide you on selecting best saving plan for your baby. Because as your child grows the need of money to balance his/her need will also rise at the same time. So careful planning is very important to avoid trouble in the future. In fact, you should start seeking advice when you are expecting a child.
  5. Education needs of your child: With rising educational costs, it has become very important to consult financial advisor to choose best plan to meet educational need of your child especially when you want your child to go abroad for higher studies. In order to make this happen smoothly, accurate planning in advance is required and only the person with sound knowledge of investment, market risks and others can offer you correct help.
  6. Child’s marriage: When it comes to wedding the first question that comes to the mind is how much money would be required and how to arrange that money. Financial planning for this is very important for calculating and planning the wedding cost in advance and role of financial advisor is very crucial as they can recommend best avenues for investment helping in meeting the monetary requirement at the time of marriage.
  7. Tax implications: With complex terms and conditions when it comes to taxation in India, you should seek an advice to avoid risks, legal and effective manage tax rules and regulations.
  8. Starting your own business: If entrepreneurship is in your blood then getting help from a consultant is utmost important as they can understand your business and chalk out a plan considering the market risks, financial matters, legal matters etc.
  9. While selecting health insurance: Medical insurance is must today in order to meet the healthcare cost during the time of trouble. But best mediclaim policy should be selected after consulting the advisor because selection of wrong insurance can create problems in the future.
  10. Inherit parent’s wealth: If you are lucky to inherit good amount of wealth of parents or family member, then you should definitely look forward to hire an advisor who can manage and grow your money. This will help you in protecting the money which otherwise might get used elsewhere.
  11. Buying property: If you are planning to buy a land/house with the help of housing loan then no one can guide you best than an advisor who will get you best home loan deal.
  12. Maturing fixed deposit: When fixed deposit matures, then people often think and start spending money they receive after maturity or they reinvest the money received. But a financial advisor will help you in growing your money further.
  13. Retirement planning: In order to meet money requirement during retirement, planner can help you in selecting best investment product so that you can live retirement life happily and protect you and your family from future financial trouble.

List of 28 Banks for Sukanya Samriddhi Account

Sukanya Samriddhi Yojana which is a long term savings plan for securing the future of girl child was launched by India’s honourable prime minister Shri. Narendra Modi on 22nd January 2015.

On the union budget presented on 28th February 2015 by Shri Arun Jaitely, Sukanya Samriddhi Scheme was declared as a tax free under Section 80C of income tax act. So everyone should take benefit of this scheme and secure their girl’s future. Moreover RBI has notified all the banks to update daily status of SSA transactions directly through the government account at it’s central account section. Failure in doing so will result in penal action i.e. such bank/branch can be de-authorized. Check out the benefits and features offered under this yojana.

On 11th March 2015, RBI declared the list of banks where interested parents or guardians can open account for the girl child. You can read in detail about the account opening form for SSA at India post office.

Here is the list of 28 banks (public and private) where parents can contact to open Sukanya Samriddhi Bank Account which is a small savings scheme:

  1. Allahabad Bank
  2. Andhra Bank
  3. Axis Bank Limited
  4. BoB – Bank of Baroda
  5. BoI – Bank of India
  6. Bank of Maharashtra
  7. Canara Bank
  8. CBI – Central Bank of India
  9. Corporation Bank
  10. Dena Bank Limited
  11. ICICI Bank Limited
  12. IDBI Bank Limited
  13. Indian Bank
  14. IOB – Indian Overseas Bank
  15. OBC – Oriental Bank of Commerce
  16. P&SB – Punjab & Sind Bank
  17. PNB – Punjab National Bank
  18. SBBJ – State Bank of Bikaner and Jaipur
  19. SBI – State Bank of India
  20. SBH – State Bank of Hyderabad
  21. SBM – State Bank of Mysore
  22. SBP – State Bank of Patiala
  23. SBT – State Bank of Travancore
  24. Syndicate Bank
  25. UCO Bank
  26. Union Bank of India
  27. United Bank of India
  28. Vijaya Bank

Apart from the above approved banks, Indian post offices has already started to open Sukanya Samriddhi Account. Check out interest rate calculation for this scheme where investing Rs.1,40,000 will earn you Rs.5,26,051 on maturity.  Also read similarities and difference between Sukanya Samriddhi Account and Public Provident Fund

There are just 3 documents required for opening account as follows:

  1. Birth certificate of the girl child
  2. Address proof and
  3. Identity proof of guardian or parents

Also see Pradhan Mantri Jan Dhan Yojana and Pradhan Mantri Jeevan Jyoti Bima Yojana launched by government of India especially for poor people.

7 Financial Planning Tips for Housewives to Secure Future

There are many housewives who are totally dependent on their husband and are not involved in finance related matters. Still they are manager of their house and one of their duty is managing the whole household budget. In the last few years, there has been a rise in inflation however the salaries have not risen in that proportion.

But many a times it happens that whenever any major emergency arises in the house, for e.g. husband loses job or gets critical health problem result in earning to stop completely but not the expenses. In such a scenario, it is important for housewives to have complete knowledge of financial planning.

So let’s see how housewives should plan finances:

  1. Money flow management: Normally housewives plan out budget for grocery or other household things whereas budget planning for loan (home/car/personal etc.) or bills for credit card, telephone, house rent etc. is done by the husband. But housewives should learn to manage these finances as well. Once this is done, you should analyse household earning and spend. This will help you to understand where are we spending more and how it can be controlled. And this task is not a rocket science and does not need any help from an expert. You can do it on your own or take your husband’s help.
  2. Control your spend: If you have analysed the cash flow then it’s a time to control each of these wherever possible. For e.g. if monthly spend on electricity is Rs. 2000 then you need to check why is it so high, what resources we’re using and how it can be controlled. So if you’re using washing machine every day then reduce the usage to 3-4 days a week. This will cut your electricity bill by a significant number. Similar check should be done on monthly expenses incurred in hotel, shopping in malls, etc. If you are a shopping fanatic, look out for deals/discounts. Doing this will save you good money. If you are a movie goer, then watch it on weekdays as tickets will cost you less as compared to weekends.
  3. Save, Save and Save: Always look for saving money wherever you can. For e.g. if you don’t have bank account then open normal savings bank account. One such account is Pradhanmantri Jan Dhan Yojana. Government has also started various social security schemes such as PAHAL scheme for gas subsidy, Jeevan Jyoti Bima Yojana and many others. Get enrolled and take benefits from these as they are money savers and provide financial security as well. You can also save on healthcare costs such as buying cheap generic medicines which are very less expensive than the branded medicines available in the chemists shop.
  4. Create financial plan: If you’re totally dependent on your husband’s income then you must know how to deal with finances in case of emergencies. For e.g. if you want to save money for your daughter’s education/marriage, then open account for her in Sukanya Samriddhi Yojana. One of the biggest advantage is that interest earned on maturity would be 100% tax free. You can read this post on downloading PMSSA account opening form. Arranging funds post retirement should also be in your financial plan.
  5. Awareness about financial products: 20 years down the line things will change, expenses will rise. For e.g. expenses for education, marriage etc. will rise. So think long term and ways to create funds for the same. For this, you need to get knowledge of available financial products in the market, which are the best and what will meet the financial objective and so on. Ofcourse before investing you should consult your husband/expert. This way you can become a helping hand to the breadwinner of the family.
  6. Investing: If you’re saving every month, then think of how to grow your money in order to beat inflation. Never let your money to remain idle in your bank account or elsewhere. Invest in fixed or recurring deposit etc. Even if your investments grow from Rs. 10,000 to Rs. 11,000, it’s good. Something is always better than nothing.
  7. Earn money, do work from home jobs: If you are well educated and yet could not provide an helping hand to your husband due to household responsibilities such as growing your children then look for ways to earn money sitting at home. You can work as a freelancer if you are good at writing, graphic designing or provide online training on your expert skills etc. There are many employers ready to pay talented work from home individuals as it cuts operating cost for the company and they are ready to work for less.

Keeping above 7 tips in mind will help in wealth protection and enhancement, making your family’s future more secured and with less obstacles.

 

How to Overcome Debt Faster & Save Money

How to Overcome Debt

Financial crisis leading to debt hurts badly whether it arises due to uncontrollable events like illnesses, thefts, job loss etc. or due to your own mistakes such as over expenses, buying expensive things etc. But have you ever thought that; careful and proper management of finances can help in overcoming the debt. If the feeling of “I’m in IN DEBT” is bothering you and giving sleepless nights then you should look forward to overcome debt in positive way instead of running away from it and delaying the repayment.

So what is debt: Borrowing money credit card company or in the form of bank loan or from your near ones is what you call as debt.

Steps to Clear Your Debt

1) The first step is to identify whether you’re in debt. So here are few signs which can tell you:

  • Delay paying monthly bills for credit card, utilities etc.
  • You pay only the minimum payment required by the credit card
  • You have reached maximum limit on all your credit card
  • You keep on getting late payment notices from your bank, credit card company

2) Contact your creditors and ask them to provide solution for repayment plan which would be feasible for you. If you have been a on-time payer previously then creditors will listen to your story and extend the time frame and cut short your interest.

3) Cut back on expenditures: Your spend should always be lower than your savings. Always set aside small part of savings aside and then use the remaining money for your everyday expenses.

4) Enlist all your debts: This is most important step in overcoming your debt. List down everything – credit card bills, loan payment, etc. And first make a plan for paying the debt for the things with highest interest rate.

5) Save money on lifestyle changes: Sell expensive items or unnecessary things such as if you have multiple cars, then you sell one of these. If you’re a party-goer, frequent traveller and spend heavily on food, club etc. then straight away stop this. Even small changes such as changing your cell phone or internet plan, cutting cost on petrol/diesel by switching to bicycle/walk can save good money.

6) Switch to a high paying job: To overcome debt, look for ways to increase your earnings. And one of the best solution is to switch job to a high paying one.

7) Look for secondary income sources with zero/very little investment but beware of fake money making schemes. Instead, if you are subject matter expert then you can offer online training for a fee.

8) Compare and buy: You get everything at discounted rate these days. So before buying anything, compare rates for the same on the internet and save money.

9) Credit counselling: If you are severely indebted and on the verge of going bankrupt then reaching out to a credit counsellor is the best solution. Make sure you have face to face discussion with them and get everything in written. They’ll carefully layout a debt repayment plan and solve your money problem. In India, few banks have taken initiative and started following credit counselling centres:

  • ABHAY Counselling Center (initiative by Bank of India)
  • Disha Trust (initiative by ICICI Bank Ltd.)
  • Grameen Paramarsh Kendras (initiative by Bank of India)

So a right and careful planning towards overcoming the debt can help in further damage control and help you clear your debts.

Planning and Arranging Money for Abroad Studies

Planning and Arranging Money for Abroad Studies

In order to make students aware of importance of money, universities abroad used to play games few years back.You can consider this as a kind of monopoly. Every month students were given some currency which they can use to pay for their seats in the classroom. Students had to pay more if they wanted to sit near to the professor. However the amount given to the students was not sufficient to last for the entire month. Therefore students used to study harder and get number one rank and then win the seat of their choice. This way students were taught the importance of money and how to make effective use of it in and this helped them in their whole life in the most easiest way and unforgettable manner.

These days students should learn to arrange money for studies especially abroad education. So here are the tips for arranging money to studying abroad:

1) Planning Before Going Abroad for Studies:

These days more and more students are going abroad for higher studies. And they need money for accommodation, study, eating, tuition fees and many other necessary things and without proper management of money all these won’t be possible. Also read – tips on credit card safety for students.

2) Currency Fluctuations:

After landing in a foreign land the financial health of the student also depends the fluctuation on the foreign currency. You should pay attention to the interest rate while transferring funds in the foreign bank account of your child. If you are aware knowledgeable on how and when any currency fluctuates then it would be easier for you to arrange money. For example, if you are aware of how value of dollar moves up and down then you can send more money to your child’s account abroad.

Considering all the above mentioned points it has become very important that – as studying abroad is very important for your child you should understand that responsibilities of your child also increases.

3) Arrange money for all expenses:

Higher education cost has always been rising over the years. Adding to this, cost of accommodation has gone up. Although every college has campus but still you should be aware of the fact that your child can choose independent room for living which can further increase budget. See also best credit card for Indian students travelling abroad.

4) Pre-Calculate expenses:

Always gather experiences of parents whose child has already undergone education in the institution where your child is going to study. Ask them about the lifestyle in the college. Expenses for food, books, cell phone, taxes, travel etc. all should be pre-calculated and based on that pocket money should be given. You should teach your child to live in budget constrained condition.