The Corporate Mom

Hello Moms! This is our part 2 in the Millennial Mom series. I am sure you recall our first one was The Media Mom.

To get started, I remember a discussion that dates back in time when I was a salaried employee. I was discussing my tax plan or rather the lack of it with another female colleague. I thought I was in pits as far as my investments were concerned, but to my utter surprise, my friend said that she has never made a single investment on her own. “There is something done by her husband on CA’s advice”, were her words. At that point, we were joined by another team mate and a senior, and the all women’s team shared their investments. A 5 year FD and real estate respectively were spoken of as their investments. But when asked, why these instruments, for what time horizon, what would be their future money requirements be like, these questions drew a blank. 

Now, Moms let me profile these women. Working millennial moms, married to high pressure jobs, over worked most of the times, all very well paid. Academically, management degree holders, fitness lovers, keen readers, well turned out, well travelled, conscious eaters and aware parents. Wouldn’t you expect them to be on top of their finances? But here’s the truth, they may have been HNIs along with their spouses but they were clueless about wealth creation.
Just like my colleagues, there are many millennial moms who have high disposable incomes but lack of awareness, interest and time add up to their financial ignorance. 
So there! We are sharing investments that the uninitiated can consider. These are overall recommendations which can aid in wealth generation and tax planning. However we do encourage our Corporate Mom to take help of a professional financial planner.

Emergency Fund: This is a critical element that we all must pay heed to. All the planning may go for a toss if we don’t keep an accessible emergency fund. Keeping all the money invested with a long term view may not be the best idea since exigencies can come down as a hard reality.

You should consider your 3 to 6 months expenses in emergency fund. If you are savvy about growing your money, then you can park the emergency funds in short term debt funds.

ELSS Funds: Equity Linked savings schemes are an ideal tax saving tool which can give better returns than traditional tax saving schemes. These are essentially tax saving mutual funds that come with a 3 year lock-in.

PPF: For those who are risk averse can invest in PPF for its tax efficiency but declining interest rates are definitely playing dampener on the returns. Plus a 15 year lock-in is a long enough horizon to get above-moderate returns from market linked products.

Mutual Funds: The equity markets have been climbing charts for the last few years. MFs have also been doing well therefore. Since MFs are professionally managed by a team of experts, they can be the best vehicle for working people. You don’t have to monitor market movements everyday basis. 

New investors with a long term horizon should start with large cap funds or balanced funds. 

The most preferred way for the salaried is Systematic Investment Plan better known as SIP. We will speak about it in detail in a following post.

Term Insurance: An important part of financial literacy is life cover. However due to misspelling and ignorance, it is not emphasized enough. Term Insurance is the protection that all income generators should take to cover for their lives in case of any uncertainties. It is a must for the Corporate Mom who makes a crucial contribution to household income.

In addition to above, working moms can also invest a small portion in Gold ETFs or if keen, then dabble in Equities with a long term view.

In the end, all we can say is investments don’t take as much time as we think. Moms and all women should consciously take steps towards investing. Remember Earning for Spending is not the deal, Earning for Growing is.

Checklist: How not to go broke this Diwali

It’s that time of the year when we all say Mera waala Pink.. We are feverishly preparing. Starting with Ganesh Chaturthi, followed by Durga puja, Diwali and right till Bhai Dooj, its packed with festivals. 

To give you a dekko of what all has played on our minds, here’s a cheat sheet of to-dos:

● New upholstery and wall painting

● Cleaning and home decor

● Sweets and savouries – home made and purchased

● Clothes 

● Gifting

● Pooja essentials and crackers

● Hosting a card party and attending a few 😄

This fervour is not going to leave anyone untouched. To achieve all this, major spends will happen. 

I recollect last festive season came as a big learning for a friend. Saying she went overboard in prep, would be an understatement. Some hasty swipes and she was up against massive credit card bills. Soon the festivals were upon us and she was having a delusional celebration owing to money worries.

To prevent from getting carried away, here’s is a checklist everyone should run past.

1. Have you checked inflow (salaries, bonuses received) vs. outflow (fixed expenses, bonuses paid to support staff or house help)? 

2. Have you made a festival shopping budget?

3. Have you made a list of people you need to gift?

4. Are there things you can up-cycle from some other time – especially clothes / gifts / crackers

5. Have you considered saving / investing a part of your diwali bonus?

6. Can you recycle the ethnic attire in the upcoming wedding season?

7. Are you ditching physical gold purchase for ETFs or a child plan?

8. If bringing home a new car, have you paid maximum possible down payment to keep EMIs reasonable?

9. Have you regularised your festival leaves with your boss to avoid loss of pay?

10. Can you manage yourself rather than calling for professional services like home cleaning, decorations and catering?

A motley of measures can save you the post celebration crunch. Have a happy Diwali Momeys! 😊

Are you max-ing out Credit Card benefits?

Increasing consumerism has led to living in a debt trap. Thanks to Credit cards, we are forever caught in a circle of debt, a viscious circle. Its hard to come out of it and just in case if you do, you are soon back into it. It’s a modern day reality and there’s just no denying it.

Well we have become such slaves to plastic money that we have stopped seeing the scenario outside it – There’s no economy other than debt economy. So much so that sometimes there’s oversight of the added benefits that come with Plastic money. Credit cards can have some real smart uses if you take note. Moms, here are our 5 most favorite ways to enjoy advantages that come with owning a credit card.

1. Credit Period

A credit card is supposed to let you spend in peace without having to pay right then. This should be best done by using the card in accordance with billing cycle. Say your bill gets generated on the 19th of every month, you should use cash or debit card till 18th and then use credit card for the remaining month. You enjoy a greater credit period because expenses from 19-30 of the month are only going to reflect in your next to next bill. Like the expenses between 19 -31 of October will come in the December bill as you get to enjoy a credit period of 40 days usually.

2. Lounge Access

It is a super handy feature we can utilize during the long haul flights. Especially when traveling with kids and older people. You can stretch your limbs, enjoy complimentary food & drinks and use the wifi. Just make sure you carry the add on access cards when you pack.

3. Memberships

A higher tier credit card brings in added memberships or experiential cards – it could be dining-out cards or membership programs of five star chains, a privileged club or pre-paid/ discounted invites for holidays. Definitely have fun using the memberships till they are complimentary.

4. Concierge

Again the higher tier cards offer you concierge services for various kinds of bookings, including movies. Did you say, “Yay”?

5. Reward Program

This may be an oft used feature since many of us love shopping with points. Credit card companies are always adding new merchants to offer a wide variety of redemption benefits. If you can make the effort of finding out which categories of card purchases attract higher points, then you can swipe your card for those purchases and max out the benefits. Also keep in mind, when taking a consumer durable or car, swipe your card to pay the down payment instead of writing a cheque for it. A fat amount will earn you more points; you should of course promptly pay your credit card bill.

Momeys! Use these hacks to become a credit card pro.

Are you over paying your home loan?

Moms you might just say, “Now that’s a rhetorical question. Of course we are over paying”. The pinch of Home Loans is so hard that it does appear as an over-paid debt. Especially because home loans are so long in duration compared to other loans like Car, Education or Personal loan. By simple estimates also, you pay double the loan amount back to your lender. This blog however is not the usual expensive home loan rant.

We recently visited the bank, for our KYC updation for a 2 year old home loan. It actually was a 2 minute process which required our signatures as per some newly introduced e-KYC rules. The loan account being least of our favourites, was hardly ever looked into, which led us to enquire about the on going rates. To our happy surprise, we WERE OVERPAYING INDEED. The rate of interest had reduced by a whole 1%. We found that bank does not automatically apply the reduced rate (which we were told at the time of availing the loan) and it required our instructions to do so.

Another learning that came out was that the rate reduction is not without a charge. We had to give a SWITCH OVER fee. To clarify the point, the current 9.55% rate was brought down to a new rate of 8.65% for a year. Post a year, if the rate of interest continued on a downward spiral then we could ask the bank to bring it down again.

The switch over fee was not transparent though, and we couldn’t ascertain the basis of calculation. But we could definitely see benefits of paying it one time and bringing down EMI for our balance 198 EMIs, saving a couple of lacs in the long term.

So as we sat back in the evening thinking through the day and reading some advice about managing a home loan, here came our take-outs:

1. Keep an eye on news about RBI’s Monetary Policy review meetings and even other news about interest rate changes.

2. Check the rate of interest with your lender periodically (atleast once a year)

3. If you are being charged for switching to lower rates, negotiate with the lender to pay as less as possible.

4. Use your bonuses, windfalls, big payments to pay the loan back. The earlier you are debt-free the better.

5. If you are foreclosing a part of your loan, ask the bank to reduce the tenure instead of the EMI.

6.  Two way tax benefits should be used – First, the interest component of the loan is eligible for deduction upto Rs. 2 lacs under section 24. Second, the principal repayment allows you deduction of upto Rs. 1.5 lacs under section 80C. To know more about tax benefits on home loans, you can see: https://cleartax.in/s/home-loan-tax-benefit

Knowing Millennials better

We wrote about Millennial Moms yesterday, and we know the millennials are all about experiences than acquisitions. We came across a great piece on Millennial women setting out their #lifegoals and living them up.

http://www.telegraph.co.uk/women/life/flight-attendants-sneakers-road-trips-instagram-game-brave/

Millennial Mom

Have you often caught yourself saying, “Life’s one heck of a bitch right now”. Finding your plates too full or sometimes too much to juggle between – you must be a Millennial Mom.

Millennial Moms have unconventional jobs, role demands, work schedules, and therefore a much higher need to be financially savvy. We are doing a series on how Millennial Moms with varying roles should be dealing with money. Here’s the piece for our first role.

Role 1: Moms who run the Media

Graphic Designers, TV anchors, Executive Producer, Creative Directors, Director of Photography… These mom’s have challenging careers and work differently from regular employed workforce. The work comes in erratic shifts, for days at a stretch sometimes and sporadically.

Most times work comes on assignment basis in the creative field. While the pays are handsome, the receiving g date is not fixed like the salary. How can one then make the best calls in managing money. Here’s a practical guide.

Pay yourself first

Freelancers are very much like the entrepreneurs. It is important to reward yourself to keep going. Take aside your salary to last you your next expected payment before you use it up in clearing the dues.

Use apps to track your payment or follow ups

A hard part of freelancing is deferred payments which you have to diligently follow up. The right apps can keep reminding you for follow ups and keep a note of your money reserves vis a vis expenses.

Emergency fund

We can’t stress more about the need of emergency fund for everyone and its even dire if your pay-checks are irregular. Emergency funds can be limited for salaried individuals who have medi-claims and other cover. But it’s critical if you are independent.

Using the upfront payment mode

When making large purchases like car, camera and heavy equipments, prefer to use the upfront payment option. Since you can time the purchase after a big payment credit, paying lumpsum will earn you rewards like bigger discounts and cash backs. You also avoid the EMI headache and heavy interest rates charged on taking loan.

Don’t compromise on Investment

Not having regularity in payments should not become an excuse to not invest. Make lumpsum investments if recurring is not possible.

Financial Advisor

The financial terms may scare you or you may be very busy to figure the investment tools. Also in freelancing, there are no employee benefits like PF, Gratuity etc. you must engage an advisor to plan your insurance, retirement and other investments.

Get a life cover

A lot of people misunderstand Insurance as an investment tool only. While it can give returns but primary use of Insurance should be of covering your life. Absence of life cover and medi claim can land you in quite a spot in case of any uncertainties.