Category Archives: Blog

Bad Spending Habits and Ways to Break them

“The best way to break a bad habit is to drop it.” – Leo Aikman

Here’s the thing, habits either good or bad come naturally to us and can be got damn difficult to break until we really make an effort. Well there’s no question to put that effort for a good habit but the bad ones over time can prove to be fatal. Take bad spending habit for instance. The way you spend money has a huge impact on your financial wellness. Bad spending habits can keep you in debt and stop you from reaching your financial goals. But sometimes it may so happen that you may completely fail to assess what your bad spending practices are, forget about rectifying them.

That’s where this post will help you. We’ll show you some of the most common bad spending habits that you may be practicing without even realising. We will also help you with how to fix them. If you want financial success, go ahead and identify your bad spending practices and then you can create a plan to deal with them.

Are you going over budget?

Sticking to budget can be tricky but it’s so crucial for our financial well being. Are you constantly feeling broke within few days after you receive your paycheck or in the middle of the month? Then you probably have a bad spending habit (or no savings plan) that you need to fix. Because going over budget consistently isn’t good because it could mean you’re spending more money than you earn which can lead to debt. To fix this, you need to track your spending on a daily or weekly basis and readjust your budget accordingly. If you know you are spending too much money dining out or you are spending lots on lunch every day, you need to look for an alternate option (have a good cook instead). You can also try using the cash envelope system for specific budget categories as well to ensure you don’t overspend. The trick is to set aside budget for major activities of the day. Another trick is to automate your savings. It’s like saving first, spending later. You can check with your bank to have a portion of your paycheck automatically deducted and sent to your savings account instead of putting the entire sum in your checking account.

Are you wasting money on services you don’t use?

Paying for something you don’t use is just like taking your hard-earned money and throwing it into the garbage. And why would anyone continue to do that! That year-long gym membership (you
barely visited for a month), the newspaper subscription (aren’t you always on the internet), the cable subscription (when was the last time you watched television), all this is eating up your money.

Sometimes certain products and services sound nice or they’re a trend and everyone is paying for them. Or, you may think that one day you’re going to use them, but that one day never comes because you’re just too busy or it isn’t a priority. Identify them and get rid of them at once. Instead of these subscriptions you may enrol yourself to something that you enjoy and would attend on a daily basis. A trend is easy let go but not your favourite hobby! Just be honest to yourself.

Are you into impulse buying?

Impulse buying is bad news and it is hardest to break. Making unplanned purchases based on emotion instead of spending mindfully can pull your budget and finances way down. Making excuses to shop just that sale is on or filling your cart with stuff that you will probably never use or dropping buy at an ‘over-priced’ cafe to grab brunch are signs that you are an impulsive buyer. There’s
nothing wrong with spending money those ways, but if you regularly make unplanned purchases on impulse, they can really add up and affect your finances. If you don’t want to spend all your extra money on random knick knacks that you didn’t really even want or need to buy, you’ll have to stop spending on impulse and plan your spending better. You can create a miscellaneous budget category that you stick to for extra, unplanned purchases. You could cross check couple of times to the items in your cart to ensure that you actually need the items and don’t just want to buy it based on a temporary emotion that will leave you regretting the purchase later. All these are ways to curb your tempt of buying. And most importantly stop using your credit card. No seriously! Paying for everything you buy with a credit card can be good practice if you pay off your card every month. If you’re swiping your credit card for things you can’t afford to pay off by the next billing cycle, leave your card at home and use cash instead. That way you also save on paying interest charges.

Wondering about setting your financial goals ?? Want to know more about financial plan. Feel free to write us on contact@sbsfin.com

 

Tips to curtail your expenses during festivals

Although we Indians celebrate festivals all year long, the important ones begin this time of the year i.e. with Ganesh Chaturthi. Festivities are times for revelry with family and friends. While you get all excited to spruce up your home during this time, you also expect to bring about a change in your own monotonous life.
And why not! After all festivals are believed to bring joy & prosperity in our lives. But what about the pocket-crunching expenses they bring along – gifts, baksheesh, mithai, and what not. All this is hard to avoid. And if you are extravagant and generous during the festive season, it may cost you dearly later. So, here are few tips to strike a balance between indulging in festivity and not burning a hole in your pocket.

Power of recycling

In the age of strong branding, festive sale and brands alluring you with all kinds of promise and discounts, there’s a bunch of new-age ‘janta’ or Instagrammars who are telling you to give importance to recycling. And what special occasion then Diwali or Navratri. Home-made drapes of beautiful old sarees can be a substitute for brand new curtains, repaint diyas from last Diwali to give them a new look, make paper lamps by colouring newspapers. Take help from friends or family or Google, even better to pick some innovative recycling ideas that can save your money, yet keep the festival spirit on.
You can apply the same trick while gifting someone – try the DIY ideas of homemade chocolates or handmade wall pieces or lamps. There are ready materials available which comes cheaper! All it needs is a little bit of your time and a lot of enthusiasm.

Shop online or off season –

Shopping is one of the major budget eaters during festival. Clothes for the family, furniture or appliances for the home, jewellery to mark the auspicious occasion and there’s no stopping. Now how does one place a budget for all this? We understand the sentiment of buying new clothes and all other stuff and we aren’t asking you to recycle this time. But what if we tell you to shop a while before the occasion. We all know the meaning of sale so let’s not fall for that and be shopping ready months before the festivals arrive.
Also, instead of going to the expensive stores in malls, you can also check out deals available online. With India going digital, e-tailers are competing among themselves to sweeten the deal for the customer. So don't miss out on this opportunity of getting some great deals on clothes and accessories online. And always, always have a fixed budget for your shopping!

Don’t make bonus part of the celebration

Bonus is a yearly thing and it’s meant to be put into good use. Most splurge away bonus they receive and that’s a mistake. Bonus is a lump sum amount and to avoid its use, one should put it immediately to fixed deposit or put it in a high-return investment vehicle like SIP investment and let it grow over a period of time.
This will in fact help loosen up your budget for next festive season. Carry this same cycle every year and your festival expenses can gradually come under control.

Organize parties / gatherings at home

Festivity is the time to relax, time to gather around friends and family and basically have a good time. Now instead of queuing up in front of expensive restaurants on Diwali night or other festive time, you can always plan for a house party where all your friends or relatives can get together and have fun together.
Since potluck is a trend these days, you can suggest the same during this time where all the party guests can bring in their own special dishes and make it a buffet treat for everyone. Sounds delicious!

By implementing these simple yet effective ideas you will not only save a lot of money, but also ensure that you haven’t gone overboard with your festive spends. Besides, festivity is all about spending quality time with your loved ones, so as long as they are around it’s always happy and merry celebration!

Looking for more ideas on festival budgeting speak to our financial fitness expert here or you can also mail us.

Crucial Steps to Achieve Financial Independence

You save for a month to buy that latest mobile phone or you utilize your bonus to take a trip with your friends or family. And you pretty much feel satisfied about the fact that your goals and finances are kind of balanced. Now, these are your short term goals which you competently take care of very well. How about the long term goals? For instance taking care of your family’s dreams or funding your child’s education or funding your retirement. And what about the time if an uncertainty strikes.

Are your financial planning that strong to take care all your short and long term goals? Well the answer to this question would most certainly be ‘Not quite’. That’s because although we give priority to savings, we don’t quite explore the territory known as ‘Investment’. And even if we do, we start investing without acquiring enough knowledge about it. Now you don’t want to be in either of the boats. You cannot rush when investing and you cannot be laid back about the whole thing. Hence strike a balance. This post will help you achieve the same!

Think why you investing

What’s your goal? Are you doing it for a short term goal or a long term?
You cannot be aimless about it at all. We come across to so many people who declare that they want to invest but don’t have a goal! That’s like deciding to travel but don’t know where. So pick your goal first. Retirement is a goal by default and is the topmost in the priority list.

Think when you need the money

The time remaining is the single most important factor that determines whether a particular instrument is suitable or not. So it helps to be precise about the duration.

Think how much you need

This means you need to know the target corpus. If you are planning for your child’s education, you can estimate what it costs today. Then with a reasonable inflation percentage calculate the target corpus during the year you need the money. You most definitely get a tentative budget. It’s no rocket science!

Think of an appropriate benchmark

By this we mean for goals that are at least 10 years away,inflation is the benchmark. An investment or couple of investments should be able to beat inflation for such long-term goals (take cue of child’s education again). The amount we invest is also important to achieve the target corpus.

Think of the asset class

Now this is another vital step. You need to know the asset class you need to achieve the target corpus, given the time you have. Once the benchmarks are clear, the asset classes should be clear too. Like: Gold is a dud investment that offers risk more than stocks, but rewards like a fixed deposit. Whereas real estate requires a lot of knowledge and a lot more starting capital.

Think of the expected return

This would need a bit of knowledge gathering as to how asset classes operate.
For example in fixed income returns depending on the overall health of the economy, it’s hard to
predict over the long-term. Post-tax 6-7% is a reasonable expectation for the next 5-10 years.

Also it is reasonable to expect equity produces returns that are close to or even a bit lower than how the GDP has grown over 5,10,15 years (depending on the duration that we have in mind).

Calculate how much of each asset class should you choose

Now you have decided which asset classes to choose and how much return you would be expecting from them. The next step is to decide how to build a portfolio with this information.
Suppose we expect 10% (post-tax) from equity and 6% (post-tax) from fixed income, we can mix them up in different ways depending on the need.

For a 10+ year goal: 60%-70% can be in equity.

For a 5-10Y goal: Anywhere between 0%-40% equity depending on comfort level.

For a 0-5Y goal: 0%-20% equity.

Please note: This is a complete tentative calculation which may differ from person to person depending on the goals each one set. This is just to give you a fair idea.

Now decide investment categories

Since by now you will be done choosing the asset classes and their proportions would be decided, you can consider the categories available in each asset class.
This would completely depend on your comfort level, understanding of the product and associated taxation. Whether you choose equity mutual funds or stocks or debt mutual funds, it’s your choice. You can also take help from financial experts to help you with this.

Wondering about your financial independence ?? Want to know more about financial independence and plan. Feel free to write us on contact@sbsfin.com

Financial Independence for women is paramount

From excelling in areas like the arts, sports, governance to pursuing the professions of their choice,from winning the world with the beauty and grace to landing in space and beyond, women have come a long way in empowering themselves. Yet when it comes to handling their finances, a lot of women still leave it to the men (if not entirely, partially) in their lives.

Although most women understand the importance of being financially independent some lack the confidence in their own ability to manage finances well. However, women should know and believe the fact that they are equally good if not better at making sensible money decisions (imagine your saving skills or purchase choice).

Just like financial independence is paramount, confidence to manage one’s own money is important too. No matter what stage of life, each phase has individual goals and objectives which ultimately strive for one thing – Financial Freedom. And the last thing they want is financial worry to overshadow their lives.

We have discussed, asked questions and gained clarity from women who have gone through circumstances that needed financial independence and they have learnt it the hard way how to have one. Through our post we will help you with few things that women must do to achieve greater financial independence.

Plan for your finances for life

You are single or married or about to get married, all this shouldn’t come in your way of having a strong financial plan. If you are single, either by choice or by circumstance, you need to create a master plan that provides a sense of direction of how to steer your finances. Married women too need to actively participate in any financial plan of the family,whether they are contributors or not, as they stand to be affected as beneficiaries. “Many married women, may seem happily settled, but, in fact, don’t have any financial freedom.

They trust their partner way too much and don’t find it necessary to build a savings basket to cater to their own needs. As a result, if they are unhappy in their married lives, nothing much can be done as they have nowhere to go with the children and have no means to support a separate life” said Mitra, a single mother.

And even if anything goes smooth, think of it this way, as women, you can bring in an element of discipline and focus in the family’s financial plan (skill sets). So, otherwise also seek active involvement in putting together a financial plan.

Switch to savings from spending

This is ultimate and irrespective of men or women, having a savings budget is an important step towards financial independence. The idea is to help you monitor whether expenses are overshooting in a particular month and to hopefully curb them in the following months.
However, such a budget doesn’t help to track your savings. So, what you need is a savings budget. Decide how much you wish to save from your family income month.

Ideally you should push yourself to save 25-30% of the household income (very crucial). Those who don’t get a monthly pay cheque can fix a percentage of saving from the yearly pay.

Don’t be ignorant in money matters. Never

This is especially for people who are married. The way you know the likes and dislikes of your family and have a good grip on household needs and requirement, you need to have a good grip on finances too. Even if you don’t have an income of your own, you must know what your family’s income and sources are (salary/business, income from investments, rent, etc.).

Know how much life and health insurance the family has. Know where to look for the documents and contacts in the event you need them. Additionally, as a good practice, have access to the family’s savings and investments through joint accounts. Mishra, a business woman, married with two kids, said “It’s most important for women to encourage their husbands to have term life insurance policies with them as a nominee. Any liabilities should also be covered through term policies so that if something should happen to him, at least the family is debt free.”
Smart move!

Seek advice

Not all of us are experts here. Taking sound advice from time to time isn’t a bad thing after all. So you can hire a good financial planner who can answer all your money questions and guide you on making a comprehensive financial plan.

Beware of free advice from your bank RM, or insurance agent who may not consider your goal in the first place. Always remember, a good planner will focus on your goals and risk behaviour to make a goal-based financial plan, and help you stay focused to achieve those goals on time. That’s basic.

Financial independence is not just about having funds in your individual and joint accounts and investments; it’s also about the ability to take strong decisions in times of need and uncertainty. It’s a big step and requires a shift in your attitude and lifelong beliefs; but it’s not unachievable and having achieved it will ensure a comfortable and meaningful life.

Our co-founder Rashi Bhargava advocates Financial Literacy and Financial Wellness in women, she believes a financially empowered women is not just more confident but also more productive and creates a perfect work-life balance. Her IAPs for women are all about the day-to-day financial issues and concerns of almost every Indian family and she works on creating a pathway solution devised out of your financial standing as per your life goals.

If you wish to enquire more about the programs or you wish to set up an appointment for a one on one discussion, write to us on contact@sbsfin.com or connect here.

A Millennials Guide to buying Health Insurance

Imagine what you could do with a lump sum amount. If you are between the age 18-30, you may just plan for an adventurous trip or head to the nearby retail store to purchase the latest gadget doing the rounds. And if you are someone who takes savings seriously, would probably head to a bank and put the money in an FD. But would you for a brief moment think of investing in a health insurance?

Let’s be real. No one really think of buying health insurance until something worse happens. And Millenials are no different. Buying or thinking about getting a health insurance is like one of those tedious tasks – going to the dentist, doing your taxes, or dealing with a neighbour. But health is above all and without insurance, a serious accident or illness could put you on the hook for staggering medical bills that will haunt you for years. So ignoring a health insurance is not advisable. But buying a health plan also doesn’t have to be ‘oh where do I begin’ difficult. This post will help you take a better decision. All you have to do is read on.

Option for Health coverage is related to Age
You age determines exactly the kind of health plan you’re eligible for. Which can also save you money. Here are some important health insurance milestones you need to be aware of:
Your age determines exactly the kind of health plan you’re eligible for. Which can also save you money. Here are some important health insurance milestones you need to be aware of:

Opt for your parent’s plan – now common, if we have been dependent on them for so many things over the years, why not health plans. Plus if you’re under 26, this is one of the cheapest options for you to remain covered. Family plans tend to have more extensive coverage in the event of an emergency. Even if you get married, you can continue with your parent’s health insurance plan, although your spouse will have to find coverage elsewhere.
Work with some perks – Office goers can always check with their employers to see if they offer health benefits. Employer-sponsored health insurance is state regulated, which means companies with 50 or more employees must offer health benefits. Many companies chip in to pay part of your monthly premium costs (similar to PF fund), and some will even cover the full amount (rare to find). Either way, you’ll still be responsible for paying your deductible and other health care costs.

Buy your independent plan – There are multiple sites and insurance providers you can find online. You can purchase insurance directly through a health insurance company or a licensed insurance agent. Depending on the information you provide, they will pick the best plan suitable for you.

 

Checklist of buying health insurance

  •  Don’t always judge a plan by its premium – Choosing a health plan based solely on the monthly premium probably is not the best way to go. Most insurance companies have at several levels of plans. So give a thought to how you’ll use your plan, and how much you’ll pay over the course of the year after premiums and medical costs. Say for instance you pick a plan that has slightly lower premium, but it doesn’t offer the services you could end up spending money on, like prescription drugs, discounted urgent care visits, and primary care doctor visits. In this case, you would have to determine if paying a slightly higher premium for a plan that covers these services would save you more money and give you better benefits over the course of a year.
  • The next criteria is network. A health plan’s network consists of the doctors, health professionals, hospitals and service facilities it contracts with to provide (generally) lower costs of healthcare for its members. While some plans let you go out-of-network and still have care covered, you’ll have to file a claim and probably pay more money out-of-pocket. So least expensive plans will have smaller networks limited to certain areas. Whereas a premium plan will give you a broader network.
  • Another consideration is that generally, the younger you are, the healthier you are. That directly translates to a cheaper premium. So take advantage of the younger, healthier you and lock in a great, affordable premium for the next 20- or 30- years.
  • Before you buy a health insurance – get some quotes online, make sure the coverage/premium fits your budget, select desired company and quote and then apply for the same. You can also hire a insurance agent who can make the entire process easy for you.

Remember health is important and so is covering it. The early you start the better it is. If you have any query related to health insurance, you can write to us and we will be happy to help you.

Tax Benefits of Health Insurance

We live in a ‘maddening working’ and ‘everything on-the-go’lifestyle.

Fiercely competitive corporate environment, extended working hours, unhealthy food habits, lack of exercise, building stress, etc. are becoming routines of our lives today. These factors have resulted in people falling victims to the lifestyle-related disorders. Medical emergencies may arrive unannounced at any point of time, to anyone. With medical inflation running in double-digits in India, there are chances that one will end up affecting his investment or savings when facing such emergency. And the last thing one would want to worry about at such times is finances. Therefore, investing in a health insurance cannot be a choice, it’s a mandate. While providing protection against expenses related to medical emergencies is the major advantage provided by a health insurance plan, the hidden gem is that it also offers tax benefits as an added advantage. The premium paid for a Health Insurance policy can be deducted from the total income under Section 80D of the Income Tax Act. The Section 80D of the Income Tax Act provides for tax deduction from total taxable income for a payment of Health Insurance premium paid by an individual. The tax deduction under Section 80D is allowed for making a payment to purchase or renew a Health Insurance policy on self, spouse, dependent parents or dependent children. Let’s look at four health insurance tax benefits that you can avail.

Benefit on boosting to critical illness riders

The unhealthy lifestyle that we were discussing may give rise to critical illnesses. So along with the health insurance you may also need a plan that can cover critical illness. And the good thing is that you can always buy a health insurance plan and customise your life insurance policy with riders such as critical illness benefits. Health insurance doesn’t restrict you in buying only one plan from one health insurance provider. And about the tax benefit bit – You can claim deductions on both your health insurance policy as well as any health-related riders. Simple!

Benefit on dependents (parents’ premium)

Your parents may be in the pink of their health now, but with growing age, medical emergencies can arrive unannounced at any point of time. So, a medical insurance for your parents is ideal. The other advantage is that the health insurance premium you pay on behalf of your parents is tax deductible.You can claim deductions under Section 80D of the Income Tax Act. However, the benefits are subject to an age criterion. If the age of the insured is under 60 years, the tax deduction for paying health insurance premium is Rs 25,000. If they are above 60, the tax deduction limit is Rs 30,000. Also, as a tax payer, if your age is below 60 years and parents age is above 60, under section 80D, you can get a tax deduction for a total of Rs 55,000. And, if you are above the age of 60 yourself and paying health insurance premium for your parents, who are super senior citizens (above 80), the maximum deduction you can claim is Rs 60,000.

Benefit on health check-ups

Stress has become part of our daily lives and lifestyle ailments are on the rise. Hence, health check- ups on a regular basis are highly recommended for you and your family. This is also another way of availing tax benefits. You can claim deductions up to Rs 5,000 per annum for undergoing periodic health check-ups. You can get this benefit if your family members go for a check-up too.

Benefit on online payment

Online payment is easy, convenient and can be taken care on-the-go. So, if you choose the online payment mode to make premium payments, you can also claim tax benefits under Section 80D of the Income Tax Act. Well, the same is valid for cheque or draft payment too. However, it is important to note that cash payment for health check-ups is eligible for tax deduction. Do remember, buying a health insurance isn’t an option, it’s a mandate to protect your lifelong savings or investments during unfortunate times. And the tax benefit is an added cherry on the cake. If you want to find the best plan for you and your family, you can write to us and we will provide with suitable options.

How to manage your finances before starting the Passion Plan

Starting your own business, becoming a travel / fashion blogger or a scuba diving instructor, all comes under our passion plan. Over the years most of us may have understood (in a hard or easy way) that passion is what drives us to success. Passion is something that sets people apart. And it’s the passion in you that’s probably driving you to leave your comfort job and live the life you always wanted to. But having said that one should give utmost importance to one’s personal finances even before pursuing the passion plan because the first steps of following your passion is usually a financial disaster. It usually means the cost of leaving a job or the cost of starting a business. These are critical costs that may stand as a roadblock between you and your plan. Secondly, passion is extremely hard to quantify and evaluate. You may have all the passion in the world, but it doesn’t guarantee you a dime. All this usually result in lack of a proper planning. Preparing to pursue your passion plan with a basic understanding of money management will give you a solid foundation to build from. Take note of these three essential finance management tips.

Save for your passion plan

Think about how you usually tick off a plan from your bucket list – be it buying a car, or going for that world tour. You set some serious saving goals before getting your hands on what you want. Starting a business or your passion plan is also one of those from your bucket list for which you need to set financial goals. Running a business or pursuing an expensive course may usually involve managing debt. So the more you save in advance, the less you will need to apply for as a loan. The more confident you get in setting and reaching your financial goals, the more responsible you will be when you actually go for your passion plan. Getting into the habit of saving forces you to become more aware of your actual financial position, rather than relying on credit, and will help you to live within your means.

Don’t cross the line

As we mentioned earlier how passion plan extremely hard to quantify and evaluate. So, whether you have started your own business or started freelancing as a blogger, it’s important to not go overboard with spending. It’s important to make sure that you aren’t stretching your budget too far and that you have a steady cash flow in your business or venture. Just don’t bleed it dry the moment you start to see the money coming in! It may seem like a fantastic idea to blow all of last month’s profit on a shiny new piece of equipment, but if next month isn’t as fruitful as you anticipated you may find yourself struggling to pay your bills. Because at initial stage, you just can’t predict. A great way to develop the habit (which most of you know out of your previous work experiences) of living within your means is to put aside money for all of your essentials first, then use the remainder as your disposable income. Saving and living within your means are great habits to adopt when thinking of going ahead with your passion plan, but to make them work together effectively you need to monitor your finances on a daily basis.

Monitor your finances

If you don’t closely keep track of your finances you may head into a dangerous territory. You can’t afford to exhaust all the income before the month ends. And if you are the one who is aiming to build a team of people then they will be depending on you financially. So, you cannot afford to go off-track. Hence monitoring your finances is so important. So make it a habit – set aside some time every week to review your financial position. A simple way to start off is by reviewing your previous bank statement. Group all of your expenses on the statement into relevant categories, such as rent, dining out, other expenses, etc. and add them to a spread sheet. Do this once a week and keep a tally of how much you’re spending in each category. Make sure you include any income you make to track that you’re living within your means and also include a category for savings, as this money won’t be available in your disposable income. This monitoring trick will not only help you to plan for the future, but will help you re-assess some of your ‘not required’ spending. Setting good financial habits before you execute your passion plan will make your journey smooth.
Learn to manage money first which will eventually be the wings to your dreams!

Are you also following your passion and need help in managing your finances then feel free to contact us.