Financial Habits Checklist: For An Ultimate Financial Success

All the Important things Would-be Parents should take care of

The journey to Parenthood is full of beautiful moments. Events like the first scan or the first kick & finally enveloping your hands around the new life born, are joys incomparable.

Having a kid also comes with many duties, many of which have to be learnt on the fly. But there sure are things that we could prepare for, like money matters should be among the top priorities. This checklist will prime all the expecting parents about their finances right from pregnancy to the first few years of parenthood.

Pregnancy Related Expenses

The financial demands start right here. Brace yourself for regular medical tests, doctor’s consultations and quality care for the expectant mother. If the pregnancy has any complications, then expenses can multiply drastically. It’s the right time to check for medical benefits provided by employer, empaneled hospitals or medical allowance reimbursement limit and process.
Maternity Leave - Sabbatical

Whether employed or entrepreneur, mothers have to consider beforehand how will the pregnancy be managed. Is there a need for longer sabbatical or mandated leaves are just fine? Factor in loss of pay if any due to maternity leave from work. Explore flexi hours or work from home options as well if the maternity leave is not paid for.
The Traditional Baby Shower

Many Indian families have the traditional big fat baby shower function for the expecting mother or the naming ceremony once the baby arrives. Footing for a large customary celebration requires financial preparation that would-be parents must factor in.
Preparing For Arrival

To usher in a new family member requires some thought and when it’s a baby, it needs a lot more than thought. Decluttering and organizing before birth itself is a smart idea. Baby cot, cupboard, toys of all sizes, diapers will soon start occupying space in the house and in budgets.
Delivery Expenses

This is again a big chunk of expense since it calls for hospitalization. If the parents are covered under medi-claim, then some part of the bill is reimbursed by the insurer. However, relying on that is not advisable. While pre-booking at the hospital for birth, parents should take expense estimates and keep aside the sum.
Pediatrician & Vaccination

Immediately post birth, enrolling with a pediatrician helps since a schedule of checkups and vaccinations is shared. The first 18 months have frequent expensive vaccines hence do plan for these expenses. Parents should also add new born as a dependent in employer’s records at the earliest, so that the baby could also be covered under the family health insurance cover provided by the employer.
Build An Emergency Fund

With added responsibilities, throwing caution to the wind becomes a thing of the past once parenthood strikes. One has to be ready for surprises and be prepared in the form of an Emergency Fund. It should be built to provide for at least 6 months of running expenses.
Insurance

A child’s birth is actually a growing up of sorts for parents too. One may not be serious about securing their future but with children, it’s no chances taken. Reassess your and spouse’s life cover and invest in adequate insurance which will take care of your child in case of an untoward event.
Save For Kid’s Education

Family and finances should be abreast of each other. Planning for child’s education should be started right at the birth. It creates discipline and gives more time for investments to grow. One of the favored ways to save is to start Systematic Investment Plans in equity mutual funds for a long term. What better than seeing your money and child grow!

Disclaimer
Mutual Fund investments are subject to market risks, read all scheme related documents carefully

Mutual Fund

Getting started with Mutual Fund investments? Here are 8 things to keep in mind

If you are about to join the bandwagon of saving, mutual fund investments are one of the best tools to be explored, for an individual who has decided to start saving and create a financial plan for the future.

While investing is a good plan, one of the biggest tasks you as an investor face, is to understand and picking the right fund. Picking the right investment option is like sending a kid to the toy store. There are so many options but he would have to prefer to pick the right one at the right time. You know how they say that the grass is always greener on the other side? Well, as soon as he has picked something, he would immediately realize that the other toy seems to be better than what he has.

Choosing the right investment is like choosing a favorite toy. Once you invest in a particular scheme, there are chances that something else might look more attractive than the scheme or fund you have already invested in. You may consult your financial advisor in case of any doubt about the product or its suitability and based on your risk appetite you should invest.

One thing to remember is that it takes time to gain potential returns. Best thing to do is to avoid getting swayed by speculative gains that seem visible in the short term. Historically, mutual funds seek reasonable returns in the long term in comparison to traditional saving investments.

It is always best to understand a few things before you start investing. Here are 8 things you need to remember before you begin investing in Mutual funds

Understand your objective while investing

When you go shopping, do you have a list of things in mind? Just like you don’t go buying things randomly without need or purpose, know what you are aiming for from your investments. Before you start investing, remember that funds are divided between different categories. Select the category of funds according to your objective. Funds that deal primarily in equity have growth as a primary objective but also have moderate to high risk. Debt and income funds with low or moderate risk; aim to generate income and could also be used for your short term goals.
Understand your risk appetite

A person who has just started working has less to worry about than a person who is retiring. Lesser responsibilities may mean more ability to take risk and vice versa. Every person has a different capacity to take risk. Ability to take risk is correlated to potential rewards. The general assumed rule of thumb here is usually higher the risk, higher is the reward. Funds can be selected as per your capacity to take risk.
Investment tenure

Today you need just a bike, 2 years hence you will want a car. Five years from now, a larger house, maybe 10 years later child education. As time moves so will your goals. The same is true for your financial goals and they can be short, medium or long term. Tenure plays an important role while selecting the scheme to invest in. Market experts suggest that staying invested may give higher returns over the long term.
Asset Allocation

The adage in English basket goes, ‘don’t put all your eggs in one basket’s in many baskets’. This is true for investments as well. Spreading investments across different funds, sectors, industries and asset classes help you manage risk in case one investment turns bad. This helps in diversifying the portfolio and spreading the risk.
Liquidity

Most people prefer cash in hand and assets like gold, why is that? Simply because they can spend/use it immediately in their time of need. Mutual funds also give you that option and are essentially liquid assets that can be sold /redeemed in part or full in case you need access to funds. Investors should read in detail about the Scheme Information Document to know in detail about the type of scheme, objective strategy and risk factors etc.
Past performance of Funds

You know that prized racehorse is more likely to win the next race over the others. Similarly, there is always historical data to refer to when it comes to mutual funds. However, past performance may not be indicative of future performance. Investments in mutual funds, like all investments, have risk associated with it. So it is advisable to research on your own or take the help of a financial advisor and select the fund type, asset class and the risk associated with the particular fund on your own before investing.
Tax Benefits

Everybody would like to save tax and grow their money while at it. Investments made in Mutual Funds in Equity Linked Savings Scheme (ELSS) are qualified for a tax deduction of Rs. 1.5 lakh under section 80C subject to eligibility. Also, investments made in MF’s in equity schemes held over a year are exempt from tax. The dividends you receive via Mutual Fund investments are also tax-free.
Fund Manager

If you’re going to a doctor or lawyer you would prefer to go to the one with more ability rather than just a known one right? Keep that in mind while investing in Mutual funds as well. A fund manager who is a professional plays a key role in investing your money for reasonable returns.

Disclaimer
Mutual Fund investments are subject to market risks, read all scheme related documents carefully

Taxation

Checklist to help you become a Tax Guru

One thing that festive season can do, is to make time fly. Soon this quarter will zip past and we would be in the critical JFM (January, February, March) as they say.

The last quarter will see the frenzy of tax planning, investing & saving, especially close to the year end. For those who discount tax planning leaving it for the very last moment, this checklist might help them become tax gurus.

Be proactive than a procrastinator when it comes to tax planning

Being proactive in planning & investing in tax saving options; help in having major savings. Though a little late but November-December is still a good time to start. Delaying can mean penalties. So one must choose wisely!
Make an appointment with your Chartered Accountant or financial advisor

Avoid the panic calls and hasty meetings. Meet your CA or your financial advisor now to know your tax liability and also to get all the proofs, deductions etc. in place.
You could DIY (Do it yourself) too

There's merit in both, taking professional help or doing-it-yourself. For example,if your EPF contribution or principalrepayment amount on home loans totals upto the deductible amount of Rs. 1.5 lakhs (under section 80C), you can file your own return. Many portals give you simplified platforms to file the returns yourself.
Look up online for tax saving products

Start with reading about different tools to invest in. Read other’s experiences about prudent tax planning. Identify as much as possible - your investment goals, investible surplus, risk profile, time horizon on your own. It will help you to choose the right product & invest your money wisely.

While researching, remember to bookmark important sites, or leave your number for representatives to call back.
Start with knowing the basic 5 tax saving investment options

There are many options available under Section 80C. Some commonly used ones are Employee Provident Fund, Public Provident Fund, Life Insurance premiums, Tax saving Fixed Deposits and principal repayment amount on home loans.

If you are using these already, you could expand your kitty with National Pension Scheme (NPS), National Savings Certificate (NSC) and Equity Linked Saving Scheme (ELSS). Each instrument comes with a pre-defined lock-in period. Remember to choose one which suits your needs.
Know about tax saving options – Those that give market linked return and those giving fixed or assured return

You can become a tax guru if you can tell difference between instruments giving market linked returns and fixed / assured returns and use them to your maximum advantage; you can also take the guidance of a financial advisor in this regard. Market linked instruments have higher risk but also aim to give you potential returns whereas fixed returns instruments will give you low returns as they carry low/no risk. We are listing down most of the tax saving instruments covered u/s 80c, subject to eligibility:

Tax planning with market linked instruments:

Unit Linked Insurance Plans, Equity Linked Saving Scheme, National Pension Scheme, Pension Funds

Tax planning with assured returns instruments:

Public Provident Fund, Sukanya Samriddhi Scheme, National Savings Certificate, 5 year Bank Fixed Deposits, Post Office Tax saving Deposits, Senior Citizens Savings Scheme, Non- ULIP Insurance plans.
Know the difference between tax saving and tax planning

At the end, remember that tax saving is a quick one-time effort to save on paying higher taxes. On the other hand, Tax planning is done over a longer period keeping various things in mind (see point 4). It not only save taxes but also seeks to create wealth.