Financial Lessons from Demonetisation

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During the demonetisation scheme we all are facing cash crunch, although it is for a short period of time. Most of us are facing this cash crisis situation now. Such unexpected financial situations should be a part of our financial planning, but the question arises here that how should one deal with such a situation. Here we are discussing about some important habit which we all need to develop in order to overcome from such circumstances.
ONE SHOULD HAVE A CONTINGENCY PLAN FOR UNCERTAINTY –
Having a contingency plan should be the first and foremost step of our financial planning. Many people plan for the liquidity requirements.  It happens because the investment options available in the market talk about the future requirement, building wealth for future but do not consider the day to day requirements.
Moneydial suggests that we all should maintain such emergency funds which should equivalent of cash flow requirements for atleast three months, which is easily accessible in a one day notice and also earns better returns compared to a savings account.
For this purpose people can opt for‘liquid funds of mutual funds’, after considering the tax implications.
Liquid Fund is a category of Mutual Fund, which invests primarily in Money market instruments like – Treasury Bills, Commercial Papers, certificate of deposits and term deposits.
These funds have no lock in period, so you can withdraw the funds from these mutual funds within 24 hours on business days: – cut-off time for withdrawal is 2 p.m. that means if you place the redemption request by 2 p.m. on business day you will get your fund credited in your bank account by 10 a.m.  on next business day. One more benefit attached to this fund is there is no entry or exit load on this fund.
MANAGE YOUR EXPENSES WITHIN YOUR MEANS –
We have learnt a great lesson fromdemonetisation of living in a limited expense. If we continue with this habit in our everyday life we all will be able to save a lot of money and escaped from unnecessary expenses. One could buy many things from little savings. We all should learn how we can accomplish things economically. Living a simple life is also a very important part of our financial planning.
King of Stock Market “Warren Buffett” also says that “Credit Cards are not your friends” if you are willing to pay 30% interest annually on credit card bill, you will not come out well.
Hence we should plan our everyday life, and channelized our money in good investment options, and then no one can stop you from achieving your dream of financial freedom.
BUY HEALTH INSURANCE –
Now a day’s critical diseases are very common in almost all families, There are many people who could not receive timely medical treatment due to insufficient fund. So it is important every one of us should have sufficient health insurance cover for our self and family. It also facilitates a cashless payments and smooth medical facilities.
FOCUS ON TAX PLANNING, ‘AVOID TAX EVASION’ –
Sections of Income tax law have designed in such a way that we can find many ways of investment to reduce our tax liability and can increase income in our hand. It is good for both ‘to grow our county’s economic health and strengthen our financial background.’ In this way Tax planning helps us to grow economically in legal way.
Once we pay our taxes we are mentally free to invest our money in instruments which gives the best risk-adjusted returns.
If we try to understand the importance of tax planning honestly we need not to evade taxes. In fact the activity of tax evasion creates burden to our mind and sort of fear. But a proper tax planning keeps us tension free and also helps us to achieve our financial goal.
REINVEST YOUR PROFITS –
When you first make money from your investments, you must be tempted to spend it, but instead of doing that, reinvest your profits. Because even a small sum of money can turn into great wealth.

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