Category Archives: Blog

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Influence of money mindset on financial freedom

When can we save or spend wisely? It is not when we earn more salary or money but rather when we inculcate wise spending behavior and the right mindset on money management. That is when any individual can instill and achieve financial freedom. While many have been earning more as per their required levels, they are literally not best in terms of financial literacy as the money management is not an easy task. The financial decision making plays a key role in tackling real life situations.
In this article let us consider the different methods of changing to right mind set on money to achieve financial freedom.

Assessing financial literacy

Well, how many of the recent college graduates or new in the job market among young age individuals know what is financial literacy? How many of them really know how to save and how to plan a budget? Financial literacy can be defined by a set of things which can help know better about your financial situation, budget, expenses, and savings. The basic questions one needs to ask themselves is:

  • How to create a budget?
  • Do I regularly follow budgeting?
  • What may be my regular expenses and what are hidden expenses that I may fore see in this month?
  • How to reduce expenses and spend wisely?
  • Do I create an emergency fund? Is it necessary to make one and how to do it?
  • How to save for long term plans?
  • What all methods of savings do I know in general?

These set of questions should be well known firstly before we inculcate and know more on financial independence. One can achieve the right financial mindset only when these questions are wisely answered. The budgeting is important amongst them, and the spending should always be lower than income.

Achieving financial independence

A healthier lifestyle in case of financial planning and freedom is required for peaceful mindset. Financial issues can certainly disturb our life in general, and hence the foundation is to maintain regret free spending and maintain financial goals. It is important to always resonate with ideas and spendings. Let us see what will help in achieving financial freedom and changing the regressive financial mindset.

Money is not an end

It is not about earning any time. It is rather about spending. You may earn much more than your peers in general, but if you cannot save on an average from income, then there is certainly no financial freedom for you. The net impact should always be calculated of a situation in prior, and one should fore see certain things always for better safety.

Freedom for right spending

You may have a pile of money, but there is no point as well in case you are not able to spend on everyday use or on what you love. This does not mean again unnecessary spending. Hence make a list of priorities. Keep a table with yourself. Mark urgent and essential category vs. non-important and non- essential ones.

It is not just about spending less but rather being protected from the unexpected

In case you are thinking all that you need is to spend less, then you are again wrong. It is about having the financial freedom to spend when in an emergency or when you are least expecting the expense. It is not just about simply saving money after paying bills and shelter but rather know correct insurances and have positive cash flow.

Financial freedom is knowing that you have to take care of responsibilities

You should realize that you are grown up and how much expenses you have to take care and incur in the upcoming future. Managing money is what you need now, not about saving money or spending less.
Hence key here is to take responsibility for yourselves. Know more about financial expertise and enhancing spending habits.

Inculcating habit in everyday life

There are no shortcuts. Success can be achieved only after step by step progress. Hence you should know and make it a habit in daily life on what you need, what you may want, what you aspire and what you may fore see. This is what will give lasting financial freedom. Creating a sustainable approach is always good. Think about the present and then think about the future too.

No excuses, please

There are never excuses. In case you are wanting to buy on luxury or take certain risks, there are never excuses. You should think and take a decision. These missteps may also lead to bad results. Hence know what luxury or risks is required and what are unnecessary. It is fine to make mistakes once a while but not excuses. Never!

Create a log

Know what regular expenditures vs. a monthly one time expenditures are. Know how much emergency fund is required and how much for long term saving. Find out on different saving options and understand what is best for you. What one may follow may not suit you depending on lifestyle, short term and long term goals, situations, and salary figures. Hence it is always good to do research and work on the number of skills!

Learn on country specific saving behavior

In India, most of us save through emergency fund which is easily diluted required cases immediately. Then mostly it is through bonds, shares, mutual funds, deposits, real estate and gold. Know what is best for which lifestyle people, read on savings behavior of same income group like you, and personalize it to your specific case and requirements along with goals. This is what will tell you which is best way for you.

All you require to do is work on financial foundation and skills. It can get you started. Then know what money means to you, what is needed, what is good to have and what you aspire.

Answering these specific questions in life will help you prioritize your needs and savings. Because all that needs for financial literacy and attaining financial freedom is clever actions but not excuses.

Wondering about financial freedom ?? Want to know more about financial resolutions. Feel free to write us on contact@sbsfin.com

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Retirement Planning through Tax Planning

Retirement means the end of your working period. It also means the end of the earning period. But to maintain the set lifestyle, a continuous flow of money i.e. regular income is a basic need. To efficiently do so, one has to foremost determine your retirement cash flow needs, 30 – 35 years down the line. And then identify your sources of income. Determine how much pension income you will receive with your current plans. And then plan things out accordingly. Having said that, building a retirement portfolio with a mix of fixed income and market-linked investments remains a big challenge for many retirees. But not when you know how to build a retirement portfolio with tax efficient plans. This post will help you get an overview of the same.

Opt for Pension Plan Tax Benefits.

Depending on the plan chosen, pension plans provide tax benefits along with a lump sum amount. Under Section 80CCC, any contributions towards pension funds can be deducted from the gross income, leading to tax savings. And the great news is at the time of withdrawal, you can withdraw one-third of your accumulated pension funds without paying any tax! This traditional plan may not give you a higher return but provides a stable return.

Health is wealth – Prioritise that

Unexpected and large expenses like medical contingencies need to be accounted for before you estimate your regular income need, else these expenses can eat into your retirement savings. Many who retire, especially in India, don’t plan for medical insurance at all. With health costs rising, this is a risk that needs to be covered. Most health plans come with tax advantage, which typically grow tax-free and can be withdrawn without incurring taxes when used toward qualified medical expenses.

Diversify your savings

Try to split your retirement savings efforts among three different buckets – diversification is key.

  • Tax-free-  Think of the traditional plans where you put in after-tax savings that then grow and can be withdrawn tax-free in retirement.
  • Taxable- This bucket includes options such as brokerage or mutual funds accounts and savings, where you’re taxed on interest, dividends and/or gains.

Having a mix can also help you better control your tax situation in retirement because you have more flexibility on how much you withdraw, from where. Diverse savings could also be key if you plan to retire early.

Keep in mind the Tax treatment of Mutual Fund Retirement Plans before investing.

Investment in Mutual Fund Retirement Plans is subject to tax deduction under Section 80C of Income Tax Act for mutual funds retirement plans (most plans). However, the maturity proceeds of retirement plans are not entirely tax free. Non equity oriented mutual funds, i.e. the mutual funds where equity allocations are less than 65% are subject to debt fund taxation. Long term capital gains for non equity mutual funds are taxed at 20% after allowing for indexation benefits. Indexation benefits allow you to adjust the acquisition price of units by the ratio of cost of inflation index in the year of redemption and the year of purchase. As a result although long term capital gain for income tax purposes is not tax free, it is lower and hence the tax obligation is also lower compared to many other fixed income investments, for instance fixed deposits.

Thinking about your retirement planning??  Want to know more about retirement plan. Feel free to write us on contact@sbsfin.com

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Taking Charge is the first step of Financial Independence for Women

Women of today – They make headlines, they are trend-setters, they manage home and workplace like a pro, they work, they party, they slay. They multi-task like there’s no tomorrow, they micromanage to make others life convenient. They are independent thinker and believer. They conquer mountains and sail through the beaches. Bottom line women are self-sufficient and independent. Yet when it comes to money matters, it is the man of the house who is entrusted with the responsibility. Women aren’t given or probably they don’t prefer taking the financial matters into their hands. There could be plenty of reasons behind it – since it’s always the men who have handled money matters, women don’t feel the confidence to take independent financial decisions (even if they are the breadwinner of the family, imagine!), women lack awareness about how savings and investments work.

Whatever her reason may be, a woman who brings income to the house, should participate in the financial matters. The realities of life are harsh. Suddenly, you may be faced with situations where you are required to handle all financial issues on your own. It’s advisable to take charge of personal finance (not just being financially independent) and be prepared to face any unforeseen financial eventualities.

Build your financial confidence. Take charge.

Women are always the victim of stereotyping – be it driving a car or handling the finance. Now either it’s the social pressure, the stereotyping or the fact that most find it time-consuming and difficult (yes even the men for that matter), women usually shy away from financial planning. But what women really need to understand is that being truly financially independent is not just about earning money, but to handle the finance and utilise it smartly. One can begin with reading about financial planning, have honest conversations with your spouse/partner/friends or colleagues, and consult financial experts. The key is to take charge. Knowing where to invest, what to save, how much to spend – the nitty-gritty of personal finance. Taking smaller steps is the best way to overcome the challenges of finance.

Make yourself the priority. Always.

Every time a woman enters a new phase, it demands a newer version of the person. For instance, it’s common for women to take breaks in their careers and compromise on their professional aspirations. After marriage, they prioritise their partners’ career and after child birth, they prefer parking themselves at home. But it’s important to prioritise yourself first. Don’t give up professional lives easily (always remember the effort you have put in), and try to work out a solution, where you can continue to be financially independent (very very important at any stage). A stable income is must for implementing any financial plan. Any.

Protect yourself. No Alternative.

You can be married, or an independent woman taking care of the family. In either situation, it’s always advisable to protect yourself against the uncertainties of life. Any unforeseen event can adversely affect the overall financial well-being of the family. Hence, make sure to get an adequate insurance cover for yourself by opting for a pure term policy. How does that help? Well Term policies provide high risk covers at very low costs. Opt for cover equalling at least 15 times your annual income. Besides regular insurance, it’s advisable to not overlook health insurance. The rising cost of healthcare and the increase in critical illnesses in India make health insurance imperative for women. You can look for policies designed for women or choose a regular health policy with additional benefits for maternal and child care.

Prepare your mind. For anything and everything

The uncertainties of life may also include falling out of love with your partner, a divorce, and other unfortunate situation like these. Make sure to know where you stand when you enter the state of married bliss or co-living. Organize titles to property, such as your house and car. Recognize that excluding your name on a title means you will no longer have ownership in the event of a divorce. Consult your financial and/or legal adviser to ensure you’re safeguarded upon a split. Now you may not consider doing all this for obvious reasons – we never wish for such events. But like we mentioned, these are part of the uncertainties of life, so it’s best to be well prepared for the worst!
No matter how comfortable you feel now, whether you’re single, married, or living with a partner, always plan your own financial future as if you were already on your own!

Your Credit Score, don’t ignore it.

Even if you’re married, keep your own credit score healthy. Creditors do not consolidate your scores—they look at them individually. In the worst-case scenario, you do not want to be in a situation where you have a low credit score, which will hinder you from taking out low-interest loans if you need it. Check your credit report and evaluate it for any errors. Pay off debts if any. Like pay off the highest-interest debt first. This is usually credit cards. Then if you have enough savings, dip into your savings to pay off high interest debt so you aren’t losing money from interest payments. You can also transfer debt from high-interest rate loans to those with lower interest rates.
Financial independence gives you a sense of self-worth, sure, but you can achieve it only with the power of financial decision making which is all about accumulating confidence and safeguarding yourself from contingencies.

Wondering about your kickstarting your financial planning ?? Want to know more about financial planning for women for independent life. Feel free to write us on contact@sbsfin.com

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Financial Resolutions for Millennials

Fitness, career, relationship – New Year’s resolutions fit in all the categories. Although one that gets ignored the most is the Financial Resolution. Just like any other resolution, taking small steps at the start of the year can really create a bigger impact in years to come. After all it’s about the money –the key that improves other aspects of life. But all this can fall in place, only if the person is committed. As Millennials – the focused bunch, the dedicated bunch, the ‘go-make-a-big-difference’ thinker this shouldn’t be a hard task. So for you, we have handpicked few significant financial resolutions that can truly help you getting your financial health in place this year. Dive in!

Save first – Make it a habit

As a millennial with a first job in hand, this should be your foremost motto – saving. Instead of trying to put large sums of money away at once, try taking a little bit of money out of each of your paychecks regularly (start of the month). Have a recurring deposit, or dedicate a bank account just for savings purpose. Starting from January, try to set calendar reminders for every month so that you can remember to save and invest regularly.

Have what you need, shop what you really want

Before you check out to pay (online and offline), take a glance at your cart and ask yourself – do I really need this? Does it make sense to buy in bulk? What kinds of sales are offered for these items?
Are there any alternatives? Can this purchase wait for couple of months? May be you can buy more when the ‘discount’ season is on. Ask these important questions and you will find yourself reducing half of the items from the cart.
Avoid impulse buying. Your pocket will thank you. So, this year, focus on checking all the items before you make a purchase – even if it means spending more time emptying than filling your cart.

Learn How to Cook / Hire a Cooking Hand

Ordering food has now turned into ‘digital shopping’. You visit multiple apps, pick the deals and order breakfast, lunch, dinner and what not! Although your tummy gets happy in the whole process, your body and wallet feel otherwise. So instead of burning a hole in your pocket, why don’t you put in a bit of effort to learn the art of cooking or hire a helping hand, even better! The amount that you can spend in your homemade meals is drastically cheaper than the prices of their comparable restaurant versions. So, this year indulge in a bit of cooking or have a friend show you the basics or get a helping hand – you could end up saving hundreds and eating healthier, too!

Unsubscribe and Chill

The gym subscription, the entertainment subscription, cable, magazines – just take a pause and think which subscription you have taken seriously so far. Do you need so many entertainment options with similar content? How often do you read all the magazines you’re paying for?

Odds are you’re signed up for more subscription-based services than you even remember. Odds are you’re probably paying for a lot more subscriptions than you really need. Unsubscribe and De clutter! This New Year make note of all of the subscriptions you use and bag the ones you don’t – you will save up big time.

Change One Money-Spending Habit

Is celebrating Friday a must? – Indulge in reading maybe. Do you order a medium coffee every day and really only drink half of it? Order a small. Is dining out during weekend a ritual? Break it with a pot luck get together. Can you bring lunch to work?

Do you really need to make the movie going thing a mandate every weekend? Sure no. You get the drill right. Don’t let any habit break your monthly budget.

A side hustle is always a good idea

One big financial resolution I think Millennial should make is around creating a side hustle/side stream of income. This is your time when you can juggle between things. Perform at a gig, give private classes to kids, be a blogger – options are many, pick the best that suits your interest or profile.

That way you can tick off things from your bucket list! You are from a time where you can make as much as you want to if you’re willing to think outside the box.

Want to know more about financial resolutions for millennials? Feel free to write us on contact@sbsfin.com

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How to get most from your 2019 Financial Resolutions

New Year’s the time for new goals, new perspectives, new achievements in life. And primarily it begins with a healthy finance. Now we may take the financial resolution fairly seriously but like any other resolution, it may suffer the ‘I quit’ symptom. We resolve to get better about money matters, improve for a couple of weeks, or maybe even months, and then let those good habits lapse. Much of that colossal failure rate for New Year’s resolutions can be traced back to setting unrealistic goals and expectations. You certainly don’t want to fall pray of it this year surely. So although you may have your resolutions set, here are a few reasonable solutions that will help you be on track. Follow them and make 2019 the year you turn things around.

Build an emergency fund, today

Boosting your cash reserves for emergency situation should take priority over all other financial goals in the coming year. Encountering a home repair, wrecking your car, an unexpected mishap, all can leave a hole in your pocket if you have to spend from your pre-decided budget. Also, if your savings account balance is above that threshold, that is if you don’t have a minimum of three months worth of living expenses/salary tucked away in the bank, you’re running the risk of landing in debt. Making an overnight emergency fund isn’t quite possible although you can start cutting down on your monthly expenses to contribute to an emergency fund. But this is crucial and you have to be determined to build out a solid emergency fund.

Unhealthy debt isn’t quite healthy for your finance

Outstanding credit card debt is bad news. This sort of debt not only costs more money through interest charges but also has the potential to bring down your credit score. If you’re saddled with debt, paying it off will save you from an unhealthy cycle where you’re adding to your outstanding tab by the day. All you have to do is review your outstanding obligations, identify those with the
highest interest rates, and pay them off first. Without any more delay. You might also look into transferring various balances to a single card with a lower interest rate. Of course, to chip away at that debt, you’ll need extra money, which you can get by cutting down on expenses (for few months) or perhaps try another hustle (turn your hobby into second income). A combination of both works even better.

Don’t derail your budget in Financial Resolutions

You may have a budget ready and this may be your foremost financial resolution of the year. That’s great! But what may come in between is a good plan to live up to this resolution. Have a framework, that’s important. List your recurring monthly expenses, factor in one-time expenses (yearly subscription basically), and then compare your total spending to your post-tax income. The figures you use should be rooted in reality, which means you’ll need to check your bank and credit card statements to get an accurate sense of what you spend across various categories! Once you have that framework in place, you’ll see where your money is going and where you have room to cut corners to put in money clearing your debt or keeping aside for emergency fund.

Get rid of big de-railers

You have a plan in hand, a framework ready but still it appears difficult for you to save more or look out for a healthy finance. The number one reason is lack of commitment. Feeling stressed at work you indulge in ordering food, went for shopping – splurged on something they couldn’t afford,Continuing to pay for unused subscriptions, Paying too much in Friday night outs, buying something that you wouldn’t even use. All this come in between your healthy financial goals. Be little committed, do bit of mindset shifts, splurge less and you can avoid these roadblocks and achieve your financial resolutions!

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

 

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How to kick-start Personal Financial planning?

Worried of exhausting your bank balance? Tired of not reaching your financial goals? Stressed how to start financial planning?

Financial anxiety is real and it can creep in more when you see other people of your age are managing it well! However, we believe everyone has their own pace to put things on track. We also believe that noticing the fact that you are lagging behind is the first step that you have already taken! The next step is to dive in at once. Even if you make a few bad choices along the way, it’s okay. That’s better than to sit on the sidelines worrying that you won’t make the best possible choice. Because once you start, you can seize more opportunities for growth and experiences, and that it’s important to put your financial planning on track!

Here are a few simple yet effective ways to plan your finances. The most important key is start today!

Where you stand? Know that

Knowing where you stand is an important step even before you start planning for your finances. Where you stand implies what numbers you’re working with and how they add up. Start by taking financial inventory- credit score, debt load, account balances, assets, net worth. There are many free tacking software available online that can give you a clear idea where you stand financially at any given moment.

Where you want to head? Define your goal.

Any planning without a certain goal is a failed plan. After you figure out where you stand, it’s time to decide where you want to go. Make a list of your goals, the relative timeline and cost for each, and then prioritize from top to bottom. Only once you’ve marked both the origin and the destination, you can decide on the best route to take in order to reach the finish line.

Financial Planning? That’s the next step

Once you’ve taken your inventory and defined your goal, you should have a pretty clear idea of how much money you have and how much you need in order to tackle that list of prioritized goals. The next steps are to decide whether you need to pay off your debt or you need to begin contributing towards a retirement account or emergency fund. Or whether to save up for a down payment! There could be a lot many goals and seemingly never enough money to fund them all. So prioritize and act accordingly.

Stuck now? Categorizing Financial Goals will help

Ideally, you can fund all of your goal categories in addition to covering your monthly expenses – designating larger percentages of income to the goals you’re pursuing most aggressively. Unfortunately, reality isn’t always ideal, and income restrictions necessitate the prioritization of some financial goal categories over others. We recommend starting with emergency savings and debt payoff. With the given budget, if you can sneak even the tiniest bit of retirement savings into the equation that would be ideal, especially if your debt is low interest.

Besides, these funds, you should also save fund for your short and medium term goals – like having a family, owning a home, travelling, etc. These funding should be independent and not be connected with the retirement or emergency fund.

If you find yourself stretched thin in an attempt to fund all savings categories, you most definitely need to consider ways of increasing your income (a side hustle maybe or investment option to be considered). There are only so many ways you can save money an cut back on your day-to-day expenses. Earning potential however is unlimited, and the freedom and flexibility that comes with increased income is a game-changer for your financial and life goals.

Wondering about your kickstarting your personal financial planning ?? Want to know more about financial management to get debt free life. Feel free to write us on contact@sbsfin.com

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Financial Must-Do’s to Prepare for a New Baby

Having a baby is one of life’s magical moments. Parents enter to a whole new phase of life which is exciting as well as nerve-wracking. And beginning of a new chapter in life means there’s so much to prepare for. Right from baby-proofing your home to financially preparing yourself for all the added responsibilities of life, there’s much to take care of! Ideally, planning for a baby in financial terms should start a year, or even two years, beforehand to ensure there is enough money tucked away to cover maternity leave and that other arrangements, such as life insurance, are in place. But not just the time of birth, planning should start at every stage taking into account your expected income, budget, current and additional expenses. Here are few financial must-do’s to prepare for a new baby. Read on.

Check on your finances

First thing first – know where you stand financially before you have a baby. And this formula applies in every stage of life. Knowing your net worth, income, expenses, etc. can help you set budgets and be well prepared for added responsibilities of life. It also means getting your credit reports and paying your bills. It’s crucial to know your finances in and out at all times!

Get debt-free

If you have a lot of debt before you have a baby, there’s a good chance you are going to add to it once you have a baby. So make sure to be debt free with the exception of long term debt like home loan before even planning to get a child in life. Getting your debt under control will give you financial margin in your life so you can focus on the priority and set your future goals accordingly.

Ensure you have Health Insurance and Life Insurance

Medical costs aren’t all that cheap in India and giving birth is no exception. Make sure you invest on a good insurance cover that will cover the cost as much. There could be a discrepancy between the medical bills and your insurance coverage. You should check with your provider as early into your pregnancy as possible to estimate what your bills will be. Once you have the estimation, you can set aside a portion of salary each month to go towards the medical bill. You should also spend on life insurance policy. A good calculation for this is five times your earnings, plus any household debt and college tuition fees.

Emergency Funds are for a reason

Most of us give importance to savings and insurance but there’s a lot of importance attached to emergency funds. We can never be certain about the uncertainties of life, so we might as be well prepared with the backup of emergency fund. You should budget in for savings so that you’re prepared in case there is an emergency. This could help if you or your partner decides to be a stay at home parent, then you have a safety net, or if there’s an emergency, like home repairs, you will have your emergency fund to pay for it.

Start saving for child’s education

Education is expensive, be it in our country or abroad. Although this may seem like a long term goal but as parents you should prepare for it as you enter parenthood. Look for Educational accounts that will have tax advantages, but they may come which certain conditions, such as the funds can only be used for educational purposes. Various plans are available in the market. You have to pick the ones that fit your goals for your child’s education.

Consider opening a Savings Account for your Child

You should open a savings account for your baby. Look for one that has no fees and no balance minimums. You could link it to your checking account so you can watch your child’s savings grow, and automatically transfer funds into it. It’s a healthy practice and your child could use these funds at the right time in his or her life.

 

It can seem like you have a lifetime to prepare for your financial future, and that of your child, but time passes quicker than you realize. So one should act beforehand to reduce stress and ensure a happy and secured financial future of your family!

Thinking about your child financial plan?? Want to know more about financial management. Feel free to write us on contact@sbsfin.com