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Salary over by 15th? 6 ways in which you can make it last longer

‘A penny saved is a penny earned’. Yet every month there comes a time when we have to choose between an evening out with friends or a boring dinner at home. Yes, a financial crunch is a bad situation but the truth is that we have all been there and done that. So let us tell you simple yet effective ways to last your salary a little longer.

1. Start budgeting:

Have an opinion on the Annual Budget? Well, how many of us have documented a budget for ourselves? There you are – Step 1: Budget your expenses. This helps us prioritize and thus keep a check on discretionary expenses. So yes, this means you cannot set aside money for a pair of shoes without paying your insurance premium. Learning how to choose what purchase desire can be postponed is probably the key here.

2. Make a list:

How many times have you gone out to the neighborhood departmental store and returned with stuff you had not planned to buy? Making unnecessary purchases is a tempting urge. And the best way to control this urge is to make a list of what is necessary and stick to it firmly. Tick the ones that you’ve taken and look only for those present in the list.

3. Do not get lured by combo offers

How exciting are BOGO (Buy One Get One) offers!! Sometimes they excite us so much that we end up buying 2 of something we didn’t need at all. If you are on a tight budget, this temptation could be dangerous. Allocation of money on the basis of need is the essential element here. Deals like these are usually to tempt the customers to buy things they don’t want. Are you going to fall prey to this tactic? Now you won’t!

 4. Use Prepaid plans

Despite excellent postpaid plans, we tend to be careless about the frequency and duration of our phone calls. Long distance calls, roaming and data consumption is something we don’t really keep a tab on. If this describes you, then you probably need to shift to a pre – paid plan. A pre – paid plan will not only help you reduce your phone bills, but will also help you inculcate a habit of putting a budget to the same.

5. Restrict usage of credit card:

While usage of plastic money is something even our Government is encouraging, it has its own flip sides. You must have felt the psychological difference when you pay with cash vs a credit card. When the crisp notes flow out of your wallet to the cashier, you tend to realize the amount of expense you are making. However, with a credit card, we sometimes don’t even look at the bill and just hand over our card for a convenient swipe. It is only when we get our credit card bills that our eye balls tend to drop out. Therefore, it is almost compulsory for us to restrict usage of credit card. We also recommend that you minimizing the number of credit cards you possess. However, as we move towards a cashless economy and rightly so, using a debit card is better to keep expenses in check.

6. Pay your credit card dues on time:

Often times, we overlook the due date of our credit card bills. While the bill amount might be low, penalty charges for late payment can be as high as 36% annually. Unknowingly, a sizable cash outflow indeed. It is therefore of utmost importance to pay our credit card bills before due date. A helpful tip in this regard is to pre schedule the payment a day prior to the due date. That ensures that the bill is paid even if we forget or get busy with something else.

How do we help?

At CAGRfunds, we help you craft a financial plan which will help you manage your salary better. We guide you to make disciplined investments right at the start of the month. This enables you to not worry about savings. As a result you become more organized with your spendings.

Whatsapp or call us on +91 9769356440 to know more.

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Wedding on the cards? Here are 6 financial planning tips for the newly – weds!

It is the wedding season and some of you who have recently gotten married or are about to tie the knot in the next few weeks must be aware of the enormous scale of wedding expenses. While it could be difficult to limit these expenses, post your wedding some cognitive steps should be taken for financial planning together with your partner. In order to preempt the chances of encountering incompatibility in financial matters, couples should opt for a plan that is fully acceptable to both partners and promises security for the future.

So before you fly up and away for your coveted honeymoon, here are 6 financial planning tips for you to be aware of.

1. Share and pool ideas to formulate an effective plan

It is very important that newly-wed couples engage in honest conversation that will serve to build a healthy climate of understanding and trust between them. Whereas the couple’s individual financial planning mechanism may have been flawless and effective before marriage, the need for absolute clarity on the way forward is critical to a future that is free of conflict and financial hassles.

2. Decide on a joint or a separate account

In a marriage, the importance of trust cannot be minimized and the couple’s financial standing, as individuals, occupies a space that revolves around the pivot of trust. The couple should not shy away from fundamental decisions such as whether to opt for a joint bank account, where the cash flow can be viewed and managed by either, or separate accounts, especially if both partners are earning members. In either case, it is best not to compromise on the aspect of mutual trust.

3. Build a fund for emergency situations

While the individual partners may have been inclined to spend money lavishly or feed off parents’ income before marriage, it is time for discipline and a sense of responsibility, once the equation changes with the newly wedded status. Adversities, especially those that arise due to financial pressures, should be anticipated and planned for.  Such challenges can take the form of an unexpected illness, a loan repayment schedule interruption or even a failed job. Ideally, this fund should amount to the sum of the expenses of a few months.

4. Save prudently

Saving is a habit which like any other, grows on people. The couple should earmark a fixed amount that will go into their savings. This amount should be determined after accounting for regular and incidental expenses that will be necessary for both sustenance and for lifestyle choices. The ground rule should be that finances are planned to allow for a reasonable and consistent remittance towards savings.

5. Invest smartly

Savings by itself is not sufficient to cater to all our future goals. Income declines or ceases altogether, as life advances and states such as retirement become a reality. It is at such junctures in life that we need a hefty corpus to sustain our lifestyle. It is therefore inevitable to continuously invest your savings in instruments that suit your profile. Inflation and the galloping cost of living can strain the best of financial plans. As such, it may be a wise decision to make the money in a savings account generate enhanced monetary benefits through judicious investment.

6. Get an Investment Plan

It is possible that prior to marriage, the couple had adequate allocation to different asset classes on an individual basis. However, post marriage, one should always look at the combined portfolio. This leads to a need for redesigning your investment plan. The help of a financial expert can be a practical and productive consideration, in this regard.

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Crazy about being fit? How about some financial fitness?

Ajay, my neighbor, was a regular “fitness freak” and never failed to capture my avid respect for his assiduous dedication to his fitness regimen. Three years ago, I was impressed enough to seek his friendship and invited him over for dinner. It was across the dinner table that I discovered his personal dilemma.

His passion for physical fitness was total and amply rewarded. However, he was nursing a deep regret in that he saw no way of realizing his abiding dream of starting a fitness center. In twenty years of working as a gym instructor, he had not managed to save any money.

As a financial planning aficionado, I immediately put on my “financial adviser” hat and apprised Ajay of “Financial Fitness” – how, by following a simple set of money management skills, a stress-free life of financial well-being can be ensured.

 1) Have predefined financial goals

The secret of financial stability begins with sorting and ordering priorities and with defining short term and long term goals. It is essential to achieve this clarity so that resources can be managed and plans laid out, to align with fine-tuned goals. If there is no sense of direction, the destination cannot be reached.

2) Calculate net worth

Once the goals and priorities are defined, assets and liabilities need to be assessed to determine the net worth of an individual. If a huge loan repayment is pending, an investor’s net worth may be negative, a situation that calls for urgent and concerted financial planning.

3) Manage Taxes

Taxes are often considered a necessary evil. While this may be true, there are numerous ways to harvest the benefit of government schemes and reduce taxable income, in the process. Filing tax returns before the stipulated deadlines and avoiding any direct or indirect course of tax evasion goes a long way towards inducing financial discipline.

4) Invest regularly

Simply depositing money in a bank cannot be the most productive way of capitalizing on savings. Investing is a wiser route to beating inflation and simultaneously building a corpus over a period of time. Align investments with pre-defined goals. It is possible that at all times sufficient funds for investments are not available; nonetheless, regular and disciplined investments should be maintained every month. Start small, but start early! Read more about this here

5) Earn as well as learn

Financial knowledge is not everyone’s forte. The lack of adequate information should not accrue as the stumbling block in financial decision making. There is no harm in consulting financial experts. Broadening the knowledge base in this domain can prove extremely rewarding. It is never too late to learn how to earn.

6) Maintain an emergency fund

If there is one thing that will remain constant, it is the ever changing scenarios that life will keep presenting as challenges. To deal with unexpected exigencies efficiently, an individual should have saved an emergency fund, which should ideally equal about 5 to 6 times of the monthly expenses. This will ensure the much needed cushion in times of emergency.

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Are you making the best use of your bonus?

Ajay and Vijay are two IT professionals working for the same firm. Having completed one year in office, they are excited about the performance bonus that they are going to receive. Both of them worked really hard throughout the year and it is time they reap the benefits of their hard work.

On one such anxious day, they were hanging out in their break out zone and discussing the very obvious topic – their upcoming bonuses!

Ajay:  I just can’t wait for the year-end bonus. I have so many things planned once I receive it.

Vijay: Really? I have a couple of things in my list too. Seems like we share common interests. What is it that you have planned?

Ajay: I am going to buy a Macbook Air for myself. It has the most amazing features. I also planto  get my brother the new Play Station he has been craving for.

Vijay: Oh okay, so you intend to spend your entire bonus on these luxury items. Hmm. I was, however, planning on something different.

Ajay: (seemingly confused) what else can you possibly plan?

Vijay: I want to use my bonus to plan my finances better. My topmost priorities are:

1) Repay debts where interest is high

I have a personal loan on which I am paying 14% interest. It is leading to high interest expense and zero tax advantage. I cannot enjoy luxuries till I have such a high interest liability due. So, I would like to repay that first.

2) Build an Emergency Fund

Normally, an emergency fund is not something that should be made after receiving the bonus but since I have not built one so far, I will do it with a part of my bonus which will ideally be 4-5 times my monthly expenses. I will park this amount in a short term debt fund.

3) Invest for long term goals

I will park a portion of my bonus in a liquid fund and start a monthly investment into an equity fund from there. This will help me create wealth over the long run ad simultaneously earn modest returns in the liquid fund.

4) Spend on what’s needed, not on what’s wanted

I want to have a clear distinction between our needs and our wants. While everyone likes to spend money based on their interest, I want to be careful about not splurging it all away on unnecessary items.

Ajay: You seem to be very adept at money management my friend. I think I am having a change of mind now. How do I plan my bonus allocation better?

Vijay: Consult an expert financial advisor about how should you best allocate your bonus.  Everyone has different goals and preferences and a plan should be devised accordingly.

Ajay: Indeed. Thank you so much for delivering this mantra to me: spend wisely, save judiciously and invest smartly!!

How do we help?

At CAGRfunds, we help you devise a suitable investment plan for your bonus such that it contributes to your long term wealth creation.

If you have received your bonus and do not know how to make the best use of it, comment on this post or whatsapp us on +91 97693 56440. We shall be happy to help!