When you’re young and carefree, it’s hard to understand the real value of money. Youngster often get misguided when they watch their friends blow tons of cash on racer bikes, expensive clothes and fancy food. We don’t feel the need to save because our family looks after all our basic needs while the pocket money covers our fancy desires. Considering that Budget 2017 offers flexible exemptions on the tax limit this year, there are plenty of ways for you to save money.
If you think there’s nothing more to life than shopping, here are 7 reasons why you should start saving early.
- College books, stationary and other stuff,
- Fuel and vehicle maintenance,
- Food, gifts and parties,
- Medical and emergency conditions,
- A fancy wedding/proposal,
- Future savings (your kids are going to thank you for it).
What’s an Ideal Saving Portfolio?
We often find ourselves clueless when it comes to investments. When choosing a policy, many questions cross our mind.
An ideal saving portfolio has financial securities linked to specific short-term as well as long-term goals. Tracking individual financial products with respect to your gaols helps you understand if you’re performing the way you want.
Why You Should File Taxes, even if you Don’t Earn?
It doesn’t matter if you fall into the lowest slab of taxable income or not, it’s always good to file income tax returns (ITRs). Why? Because:
- If you’ve been planning to invest money in the share market, you can get your short-term losses adjusted short-term gains. This is beneficial for your future savings because you can carry forward this data to subsequent years.
- By filing ITRs, you can always claim for tax exemptions.
- ITR comes in handy when you’ve to apply for loans. Filing income tax returns qualifies you as a responsible citizen. This way you gain market credibility and banks offer you loans.
- ITRs prove beneficial if you buy an asset in the foreign country.
- ITRs are of great importance to NRIs and foreign immigrants. They’ll help you get your documentation done faster than before.
Top 5 Saving Schemes for the Youth
- Public Provident Fund (PPF)
Top-most saving option with maximum safety, lock-in period 15 years, you can withdraw PPF after 5 years or apply for a loan on it, principle amount and interest tax free, invest minimum Rs 500 and maximum Rs 1,50,000 annually, available in banks and post offices.
- National Saving Certificate (NSC)
Better than bank fixed deposits since your money remains with government of India, available in banks and post offices, though interest is taxable; if you keep it invested for a long time you can claim tax deduction, no maximum limit for saving, Interest rate is 8.5% for 5 years and 8.8% for 10 years, use this certificate as collateral for getting bank loans.
- Equity Linked Saving Scheme (ELSS)
Minimum Lock-in Period of three years, you can rotate investments after three years, tax-free dividends, averages market fluctuations, maturity amount is tax-free, riskier than bank savings as money is invested in the share market, better returns than equity mutual fund, anyone can directly invest.
- Health Insurance
Tax deductible, comes in handy when you suffer from grave diseases, tax savings up to Rs 40,000, Tax deduction limits: Rs 15,000 for non-senior citizens and Rs 20,000 for senior citizens, tax free family health check-ups.
- Unit Linked Insurance Products (ULIPs)
Cheap, cost less than direct mutual funds, lock-in period is 3 years, tax-efficient, money invested in share market, makes you habitual of regular saving, requires you to have insurance cover, can’t withdraw money before 5 years.
This post addressed the how’s, why’s and where’s of tax savings post demonetisation. With Budget 2017 set in motion now, we’re expecting more policies to come up. Just keep an eye on the share market since it’s a good time to invest in shares.