Don’t lax, pay your tax

Momeys.. Bet your lists are going berserk with holiday season approaching. For a lot of us, travel would be on cards. A flurry of hosting to playing guests at weddings & parties will take up time. Add to that the pressure of turning out your best – a few salon visits & shopping trips – there goes any possible free time out of the window. But no one’s complaining. After all December is a time we all love waiting for.

Now having looked at literally the brighter side 😊, this post is to remind about the money that shouldn’t fall prey to taxes. We have seen from very close quarters, fellow momeys have heavily procrastinated, only to loose money to tax.

November-December can be busy time but it shouldn’t come at the cost of tax planning. For those in mid to high tax brackets, this is a great time to take stock. Here are simple steps to approach tax planning:

1. Calculate your year’s taxable income. For eg. If you have rental or interest income in addition, add it to your salary.

2. Determine your tax bracket

3. Check if you have any deductible investments like Home loan payments, life insurance, PF contribution, PPF etc. Under 80C, you can get tax deduction upto 1.5 lacs.

4. Check for any shortfall in the deduction limit of 1.5lacs. If the tax free investments are not totalling to 1.5 lacs, you need a tax plan.

5. Revisit your financial goals. If your money requirement will be soon, you will have to look at lesser tenure options.

6. You believe in No risk – No gain? Momeys if you want utmost safety of your capital, choose safe fixed income options like PPF or FD. If minor volatility doesn’t bother you, you can take some risks with market linked options like NSC, ELSS.

7. If youYou want higher returns, then zero down on NSC or ELSS. (ELSS would be our choice)

8. Save your investment proofs in a folder. While filing taxes, you will need the proofs handy so ensure you keep them easily locatable.

9. Invest because today is the best day. The sooner you finish tax planning and have your choices ready, go ahead and make a purchase. Often delay in investing leaves you in lurch when employer’s HR asks for proofs. For lack of proof, they deduct tax from salaries. You could totally avoid such rude shocks.
In the end, all we can say that is every money cautious person is taking stock of their tax liabilities ahead of the spending season . Are you too momey?

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! 😊