It's the end of the year, and it's a great time to spend a few minutes and organize your finances. The team at Thrive share some of their experiences, including excerpts from interacting with others, which can help you get organized.
There are government schemes out there that work.
"The simplest thing to do is to top-up your PPFs. We often limit PPF exposure to the extent of 80C requirement, but it's an option that provides zero capital gains tax. At 7.9% return and no tax on gains, it's comparable to a product that provides close to ~10% return at no risk." - Aditya Rao, Advisor
Yes, there are schemes that work - Sukanya Samriddhi for the girl child, Senior Citizen Savings Schemes for elders and the PPF for everyone. A few minutes of research and you can identify the ones that are apt for you.
Set up simple reminders for your bills.
"Take a few minutes to set up alerts on your calendar app for a few items - credit card bills, utility payments, rent payments, school fees and reimbursements at your firm. It's a good practice to set an alert a few days in advance of the actual bill." - Govind Gopinath, Advisor
The higher you save, the bigger the corpus you build. Though these may seem small now, they tend to add-up to something much bigger than what they should be. So, keep things simple and never miss a deadline.
It's difficult to meet a savings goal every month, but a range helps.
"I tried using expense apps to track my spending patterns and it only became harder with exact numbers. So, I resorted to something simple - I started maintaining a range of savings that work for me. If I really need to spend, it's fine as long as it is within my range of savings." - Akhil KT, Product Manager
You don't need to set rigorous savings goals such as 80% or 90% of your income every month. But, you could set a range that can satisfy your goals and that is achievable. If you need help identifying this savings range, just drop us a message and we can help you.
Build a mental map of where your money is.
"Apart from real estate, there is PPF, EPF, NPS, savings accounts, FDs, RDs, mutual funds, stocks, bonds, post office schemes and insurance. All of these multiplied by the number of members in your family equal the number of accounts. Simple- take out a pen and paper and write down value, gain/loss amount across each of these accounts, every 3-4 months." - Prawin, Advisor
An overall view helps, especially when you make large financial decisions. Say, you want to buy a car or repay your loan next year, where do you remove your money from to ensure least tax and long-term consequences?
Get a third-person view on every major decision.
"There was a capital protection scheme, where someone guaranteed 50% return over three years based on options. There was a guarantee of return and no cost attached, as if they were doing public good. Thankfully, I understood the risks with unrated bonds and underlying commissions." - Sri Sudhan, Marketing
Things that are too good to be true seldom exist. It is a good practice to run these with a trusted advisor before making any decision. This can be someone you know, as long as they have a deep understanding of products and commissions.