Do you have money put away for a rainy day? How will you manage if there's a family emergency? What about a down payment for a home, or a fund for higher education, or retirement? Do you have loans to repay?
In this era of recession, deflation, and job cuts, it is especially important for you to consider where your hard-earned money is going; financial security is the key in today's unpredictable world. And the first step towards gaining that security is to have a Saving Plan.
Still not convinced? Then ask yourself why you need to save.
The answer's really very simple: so that your money can start earning money, and work towards reducing the effort you put in everyday.
START SAVING NOW: HERE'S HOW!
You might wonder how to begin saving if your income is already over-committed. Efficiency and discipline are the answers.
a) You need to first find out where your income is going. Maintain a diary for the month, noting down everything you spend on, to the last paisa. You will be surprised at the amount of random purchases you make - from coffee breaks to grocery bills. These are the best places to start trimming.
b) Then, make a budget. This isn't as difficult as you think. All a budget does is create a plan for spending, by stating expenses and goals. Make sure to cover fixed and regular expenses such as mortgage or rent, utility payments, and car or loan/credit card payments. Then set limits on necessities like groceries and clothing, as well as nice-to-haves like entertainment and travel. It's also important at this stage to factor in a savings amount.
c) Now, your first priority is an emergency fund, if you don't already have one in place. And the easiest way to do this is to have the amount deducted from your salary every month and put into a Fixed or Recurring Deposit. Give yourself a pat on the back if you find yourself adding that little extra to your fund because you managed to save a little more this month. You might find it easier to stay within budget if you use cash or debit cards for the necessities and frills.
d) As your emergency fund accumulates, your next task is to find more money for savings and even investment. Begin by paying off your credit cards. If you spend a little time examining your monthly statements, you will be amazed to see how much money you're losing just by way of interest!
SAVING Vs INVESTING
At this point, we need to address the differences between saving and investing.
Savings provide for emergencies and fund specific purchases in the near future (within two years). The primary goal is to store funds and keep them safe.
However, you invest to increase net worth and work toward long-term goals. Also realise that investing involves risk, where you could lose some of your original investment.
Only consider an investment plan when you have in place an emergency fund, insurance, control over credit use, and a retirement plan.
IN THE LONG RUN
Now, consider making a long-range savings and investment plan. When beginning to plan for investments, consider your goals, the amount of time you will be able to spend on nurturing these investments, how much you know about the funds, how much money you have to invest, whether you can tolerate risk, and handle loss.
Remember that your ultimate goal is a financially secure future for you and your family.
If you look back over all that we've discussed so far, you will realise that we've told you how to begin saving money, in small, manageable chunks.
The final objective might be to set aside enough for you to retire so that you don't have to work another day, but your immediate goal is to start the process and become habituated, so that saving becomes a way of life, and a chance to improve how you live.
Tuesday, December 1, 2009
Now, open a bank account in a grocery shop
Very soon, the kirana shop and the PCO in your neighbourhood, your insurance agent, a retired teacher and the nearby petrol pump, could
provide you with a slew of banking services like deposits and withdrawals, opening of accounts etc from their premises. On Monday, RBI permitted banks to appoint these entities to act as their agents and carry out several of the bank's operations. All these though, will come for a fee, pre-decided by your bank.
RBI has allowed entities like individual kirana/medical/fair price shop owners, PCO operators, agents of government-sponsored small savings schemes, insurance agents, petrol pumps owners and retired teachers to act as ‘business correspondents' (BCs) of banks. A notification by the RBI said that allowing banks to appoint BCs (agents in common parlance) was part of its financial inclusion initiative.
In August, an RBI working group was of the view that since the traditional ‘brick and mortar' banking model had limitations penetrating remote areas of India, the BC model could give banks a workable solution to provide banking services in inaccessible areas in a cost-effective manner. ‘‘Banks need to accept the BC model as extremely vital for achieving the goals of financial inclusion,'' the working group had recommended.
While appointing BCs, the RBI has looked at two aspects. One, BCs should have experience in handling cash inflow and outflow as part of their normal activities, so that the issues relating to cash handling are addressed. ‘‘For streamlining cash management, banks may consider adopting ‘cash routes' linking various BCs which are in close proximity to each other to a base branch, wherever warranted with suitable cash transit insurance,'' it said.
Secondly, to give the BC model a local touch, it said ‘‘banks may ensure that while appointing the above entities as BCs, the principle that the individuals are residents of the area in which they propose to operate as BCs, stands fulfilled.'' On issues of charges, RBI said it is the bank which will charge the customer in a transparent manner. BCs will not be allowed to charge customers directly.
as per Economics times report
provide you with a slew of banking services like deposits and withdrawals, opening of accounts etc from their premises. On Monday, RBI permitted banks to appoint these entities to act as their agents and carry out several of the bank's operations. All these though, will come for a fee, pre-decided by your bank.
RBI has allowed entities like individual kirana/medical/fair price shop owners, PCO operators, agents of government-sponsored small savings schemes, insurance agents, petrol pumps owners and retired teachers to act as ‘business correspondents' (BCs) of banks. A notification by the RBI said that allowing banks to appoint BCs (agents in common parlance) was part of its financial inclusion initiative.
In August, an RBI working group was of the view that since the traditional ‘brick and mortar' banking model had limitations penetrating remote areas of India, the BC model could give banks a workable solution to provide banking services in inaccessible areas in a cost-effective manner. ‘‘Banks need to accept the BC model as extremely vital for achieving the goals of financial inclusion,'' the working group had recommended.
While appointing BCs, the RBI has looked at two aspects. One, BCs should have experience in handling cash inflow and outflow as part of their normal activities, so that the issues relating to cash handling are addressed. ‘‘For streamlining cash management, banks may consider adopting ‘cash routes' linking various BCs which are in close proximity to each other to a base branch, wherever warranted with suitable cash transit insurance,'' it said.
Secondly, to give the BC model a local touch, it said ‘‘banks may ensure that while appointing the above entities as BCs, the principle that the individuals are residents of the area in which they propose to operate as BCs, stands fulfilled.'' On issues of charges, RBI said it is the bank which will charge the customer in a transparent manner. BCs will not be allowed to charge customers directly.
as per Economics times report
Raise tax exemption limit for citizens to Rs 4 lakh per year
NEW DELHI: Industry body Assocham today asked the government to raise the tax exemption limit on personal income from Rs 1.6 lakh per annum to Rs
4 lakh per annum and for senior citizens up to Rs 5 lakh per annum.
The industry body was giving its proposals on the draft direct taxes code which has been put in public domain by the government for comments.
The direct taxes code, which will replace the age-old Income Tax Act 1961, has proposed the tax exemption limit for common citizens at Rs 1.6 lakh while that for senior citizens at Rs 2.4 lakh per annum.
"With favourable consideration of this proposal, taxpayers in low and middle income group, who could end up paying more tax than now, on account of removal of various exemptions and deductions under DTC, can benefit from raise in threshold limit as tax savings on account of increase in it could offset impact of removal of exemptions and deductions," Assocham President Swati Piramal said.
Meanwhile, the industry body has also urged the government to bring in standard deduction of 50 per cent of the salary or Rs 2,40,000, whichever is less to balance out additional tax burden, which employees would be facing due to removal of various exemption.
4 lakh per annum and for senior citizens up to Rs 5 lakh per annum.
The industry body was giving its proposals on the draft direct taxes code which has been put in public domain by the government for comments.
The direct taxes code, which will replace the age-old Income Tax Act 1961, has proposed the tax exemption limit for common citizens at Rs 1.6 lakh while that for senior citizens at Rs 2.4 lakh per annum.
"With favourable consideration of this proposal, taxpayers in low and middle income group, who could end up paying more tax than now, on account of removal of various exemptions and deductions under DTC, can benefit from raise in threshold limit as tax savings on account of increase in it could offset impact of removal of exemptions and deductions," Assocham President Swati Piramal said.
Meanwhile, the industry body has also urged the government to bring in standard deduction of 50 per cent of the salary or Rs 2,40,000, whichever is less to balance out additional tax burden, which employees would be facing due to removal of various exemption.
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