Financial management has to be one of the most daunting and demanding tasks that can cause an individual stress. There is simply no margin for error, and a slight misappropriation could have far reaching effects in the immediate future or sometimes later in life. Now, more than ever before, personal finances are at a greater risk thanks to the availability of easy digital spending platforms. Purchases are made easier by swiping or just by a touch of a button, and bank accounts are accessible through a myriad of services. With a few clicks a person can have thousands of dollars of credit and being destroying their financial future.

The Essence of Personal Financial Management

Basically, personal financial management entails understanding your financial situation at current state, and making plans for the future with what you have. It could also be taken to simply mean watching your spending, and saving what you can. It is important to be careful as someone can easily overextend themselves with just a couple bad moves.

The Specifics of Managing your Finances

Income and Cash Flow management

The easiest way of making the most out of your income is by putting in place a mechanism to track and understand what you get versus what you spend, and finally being able to gain capital for covering other additional concerns, as well as setting the stage for a bright future. However, what challenges most individuals is the means of tracking those finances.

Tracking your finances

Financial experts will tell you that the best way to track your finances is by keeping records of every single financial activity. It’s that simple.

Your financial trajectory will be drawn by calculating your monthly, weekly, or daily income against the amount you spend over the same period. Remember, in addition to your daily expenses and other miscellaneous expenses, other amenities such as rent, insurance, subscriptions, etc, should be included in your record. That way you’ll be in a good position to see the real picture and take the necessary steps.

By having such a detailed record, you will be able to qualify expenses in order of necessity, and somehow cut down on the ones you deem unnecessary, or those that you can do without. Luckily, today there are apps dedicated for the purposes of recording personal emoluments instead of keeping an Excel sheet (which is not a bad idea at all). When you can look at all of your expenditures at once, it makes it much easier to figure out where you are going wrong.

Financial Security and Growth Management

Insurance and investment have been listed by experts as areas of great importance. However, these are areas associated with persons who qualify, or can afford some expendable capital even after balancing their other expenses.

Insurance, for instance is listed as a basic requirement for modern living. You will need to identify a good insurance that promises to secure the well being of your family when hard times come, and no one knows when they do.

Investment on the other hand is dictated by a number of issues, like how and when to venture. It boils down to thinking strategically and taking risks, through what is projected to provide financial stability in future.

The best way to go about it is through starting off with a professional to manage your investments. It is an expensive venture, but the importance of lowering the risk outweighs the deal.

Putting up Liquid Savings

Part of the money meant for savings and growth should be accessible should an emergency arise. This could mean either maintaining a savings account with an emergency clause, or investing in a long term venture but with the ability to secure quick transactions during emergency. Ideally, it’s good enough to have enough money to live on for six months or more if a major issue arises.

Summary

The idea here is to practice individual financial discipline and to understand the different strategies of financial management, and how and when to execute them. A complete financial plan is what constitutes a stable financial future, but discipline is paramount. It takes dedication and sacrifice to attain the above, even when low or high risks are involved.

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We all know that saving money is an art, but saving money on tax is a bigger art. Well, we all are aware of different tax rules associated with our daily life. And who doesn’t want to save money on tax? We basically evaluate all our expenses and savings and try further to save money on tax. One of the most common and highly effective tools associated with tax saving is the investment in life insurance policy. Yes, in India, life insurance is eligible for tax deductions under Section 80C. But do you really think it is simple, there are many terms and conditions associated with the same.

Tax rules you must know

1. When it comes to the tax deduction, there is a certain limit associated with the same. For all those policies which were issued on or before March 31, 2012, the maximum premium amount that will be eligible for tax deductions will be around 20% of the total sum assured. Anything in excess to this will not be liable for any deduction under Section 80C.

2. The maximum premium that is eligible for deduction for the plans that are issued on or after April 1, 2012, will get 10% of the total sum assured as the tax deduction. For example, if you invest in an insurance plan and that too which carries the sum assured of Rs 10 lakhs. Keep in mind that the annual premium which will be eligible for tax deductions would be around 1 lakh cannot be claimed for tax benefits. However, if the person is suffering from an illness that is listed under Section 80DDB or has a disability listed under Section 80U, an additional deduction in premium of around 5% is permitted. Therefore, in such cases, the maximum premium which will be eligible for deduction under Section 80C will be 15%

3. Premium amount that is paid someone else like other than children, spouse and self will not be liable for deductions.

4. In case of maturity, if an individual is fine with all the above-stated criteria, the maturity benefits stand exempted from tax. But if in the case where the annual premium exceeds the percentage limit which is mentioned above, the tax will be levied in accordance with the income tax slab

5. In case of demise of the insured person, the death benefits are not taxable.

Moreover, the good thing is that the term insurance plan which is a strong form of life insurance is not much affected with the same. And, in today’s market, there is the multiple and wide range of such plans is available in the market. Such effective plans carry a sum assured which is much higher than the annual premium. So investing in the same is not a big deal and it always comes out with a wider range of benefits.

However, it is important for you to understand that the concept can be different with single premium policies. As a part of these policies the sum assured is not high just to improve the returns. Therefore the premium amount associated with the same fall low, creating not enough percentage difference between the sum assured and the premium.

Under such policies, the sum assured will not be more than 1.5 times the premium amount. As a result single premium plans will not be liable for the tax deduction.

It is true that a life insurance plan demands a long-term commitment that may last for a couple of years. It is obvious that between the tenure policy you don’t want to discover that you made a huge mistake as your premium will not be liable for tax deductions. Then it will become quite late. Even if you want to cancel the policy then you have to pay unexpected charges.

So it is important for you to pay attention to the tax laws, study the same properly before investing in any insurance plan. Term insurance plan comparison is a great choice if you are planning to invest in the term plan. It will provide the needful financial cover to your family in your absence and will be liable for tax deductions. For making an investment in a term insurance plan, you can take help of PolicyX.com which is a great platform and assisting customers in choosing the right plan for them.

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Retirement is often considered to be the icing on the cake when it comes to enjoying different phases of life. While planning your life after retirement, you must set aside all of your current responsibilities and worries. Retirement leaves you with rare opportunities for participating in recreational activities, traveling, and nurturing certain hobbies. However, you mustn’t forget that you won’t have any regular source of income for the rest of your life. You must remember that you need funds to sustain all health issues and financial challenges after retirement. By making a few crucial investment decisions, you’ll be able to spend the rest of your life in leisure and comfort. Financial planning should be initiated now when you’re working and in good health.

It’s a truly daunting task for you to compare various pension plans and achieve an uninterrupted flow of income after you get retired. It’s certainly going to be a taxing issue for you to narrow down your choice of a pension pay-out although even after you select a beneficial pension plan. Apart from seeking professional assistance, you must also do extensive research on the factors that count for retirement planning.

Tips to acquire funds for your post-retirement years are mentioned below:

Calculate your basic living cost

You must choose a pension plan that yields a good return for covering all of your basic monthly expenses. You must assess your regular expenses just to determine your mandatory expenses in the future. In order to arrive at an accurate figure, you must include your sundry expenses, transportation cost, expenses pertaining to clothing and food, utility bills (including gas and water), and housing costs in your list of expenses.

Consider the effects of inflation

Inflation is bound to take a toll on all goods and services making the living cost dearer with each passing year. Indians are witnessing an inflation rate worth 4% of late and this is likely to rise during the coming years. This way, you’re bound to experience a rise in pension pay-out based on the rate of inflation. On the contrary, the amount that you receive won’t prove to be adequate for meeting your basic expenses. This way, you may even be compelled to seek financial assistance while you aren’t working anymore.

Avail some health coverage

You must learn to cope with the increase in health care costs. Opting for a health insurance plan can actually save you from the adverse impact of unforeseen medical expenses on the monthly budget. You must plan things up in advance and work things out in an efficient manner. Try applying for a health plan that can protect you and your loved ones from all untoward incidents.

Include the cost of recreation

Retirees are often known to enjoy their pastime by pursuing their hobbies, visiting their favorite destinations, reading their favorite books, and doing a host of other things. You’ll need to pay a cost for the perks that you enjoy; you must pay things out of your pension. You must save a portion of your pension to cover your costs more effectively.

You must consider the tips mentioned above if you really wish to enjoy your golden age with ease and comfort. It will help you achieve a firmer grip over your entire financial situation. All you need to do is to pick the right pension plan and utilize the money in an efficient manner just to secure your old age.

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In uncertain economic times, having gold on hand is a surefire way to liquidize and protect your assets. Even in a stable economic environment, gold is a safe haven asset that will never fail you. This is because gold’s value increases instead of decreases in direct relation to the decline of value in paper investments, such as stocks and bonds.

To minimize or even eliminate a fall in portfolio value during economic collapse it’s best to invest in uncorrelated investments. What this means is that you want to own assets that will move the opposite way of other investments when economic times become uncertain. Gold is one of the few guaranteed investments that are uncorrelated to many other investments. This makes it a very safe investment that has proven to remain positive when stocks fall.

This means that allocating some of your investment to gold is a sensible and solid choice. However, the buying of gold bullion is not always as straightforward as one would hope. There are plenty of precious metal dealers who will gladly take your money without having your best interests as a customer at heart. To avoid falling for an unscrupulous dealer, you’ll have to do a little research into finding the best dealer so you can purchase gold with confidence.

Online vs. Local

In general, there are two main ways to buy gold: online or locally (in person).

Local precious metal dealers can be found in cities around the world. However, brick and mortar stores will often come with a lot of overhead. This is due to rent, paying employees, security, and more. This added overhead and the fact that local gold dealers often have lower sales volume means that they will often have to charge more for gold bullion to make up for their costs.

On the beneficial side, a local gold dealer will mean that you will be able to physically inspect the bullion and take immediate possession of it when you purchase it.

Local dealers also have more of a reason to care about their reputation in the immediate community they serve, which may translate into higher quality of service when dealing with them.

Also, if you’re only buying small quantities of gold and you’re paying for it with cash, your purchases at a local dealer might not be reported to the tax authority and can stay confidential. If this is something you are considering, make sure you discuss it with your dealer to make sure you stay below the threshold for reporting.

The other option for purchasing gold bullion is through an online dealer. Online dealers typically do more business and will have higher volumes of sale and much lower fixed costs. This means that you can often find good gold bullion at a solid discount online.

Online dealers will have a much more varied range of products in stock and many even offer convenient buy-and-store programs that permit you to purchase the gold bullion and then keep it in an insured and protected location made available by the dealer. This can be very beneficial since storing your own precious metals can be risky.

Some people are nervous buying bullion online, since it is such an expensive product. However, if you are able to find a dealer with a long, solid history and positive reviews, you will most likely be in good hands.

Unfortunately, buying gold online means that you will have to pay for shipping and handling costs (which are not cheap when it comes to materials of this value), and you will have to wait to physically take possession of your gold. Some online gold dealers like Lucius Precious Metals offer free local delivery for orders over a certain price point, which can be something to consider if you’re in the area.

What to consider when buying gold for delivery

If you are purchasing gold online and looking to have it delivered to you, you’ll want to consider a few things.

First, you want a dealer that has a strong and solid reputation and years of reliability. Read customer reviews and check out investment forums to make sure your chosen dealer doesn’t have any shady reports out on them.

You also want to make sure that the dealer sells only gold coins and cold bars from LBMA-approved wholesalers. This is your best guarantee that you will be purchasing authentic coins and bars.

You’ll also want to check out the dealer’s premiums on bullion. This can vary widely throughout the industry and is not a set-in-stone number. Lastly, check out the difference between buying and selling prices on the dealer’s site, which can be as high as 10% or more.

To maximize your long-term profits, you need to work to find a dealer who is reputable and trustworthy and offers low premiums.

What to consider when buying gold for storage

If you’re buying gold for storage, you still want to check out a dealer’s reputation, bid-ask spread, and other factors mentioned above, however there are other factors that come into play when buying gold for storage.

For one, you’ll want to examine the storage facilities where your precious metals will be kept.

Gold bullion should be stored with a reputable, separate entity so as to reduce counterparty risks. Ideally, you’re looking for an LBMA-approved vault provider like Brinks. These types of companies store gold reserves for massive financial institutions and government bodies. This assures that your gold is being stored in a secure environment.

When storing gold, make sure that your dealer offers insurance that will cover the full replacement value of your coins or bars in the event that something were to happen to them. Full replacement means that you will get back the physical equivalent of the gold lost, and not just the cash value—which is based on the spot price of the metal.

You’ll also want to make sure that your gold is fully allocated to you. This means that it is held in your name, you are the outright owner, and the gold can be made available for delivery or sale at any moment. Unallocated gold bullionis shared by investors who own an interest in the bars, which raises all kinds of liquidity issues that we recommend avoiding.

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You must have considered a life insurance policy as something that only provides support in the event of a financial crisis. But you may not have considered its potential in the form of a long-term investment. Life insurance yields a great shield of safety around your household members in the event of an unforeseen wage loss e.g. accidents causing disabilities or death. The consideration of income loss for the future helps in determining the amount of compensation although the true worth of a human life can’t be measured in terms of money.

Under circumstances when the policyholder gets disabled or passes away, the family members achieve a guaranteed sum of money termed as the “sum assured”. Even with a term insurance plan, the policyholder needs to think of what he’ll achieve from this type of investment in case nothing unfortunate happens. Will he be able to meet the other inevitable expenses like that of bearing the cost of his children’s education, a world trip with his loved ones, and the marriage of his children?

Types of maturity benefit plans:

Term Life policies- Term insurance is a financial plan that reimburses extra premiums to the policyholder when the policy terms end and the insured survives through this period.

Endowment policies- The benefits of insurance and investment are combined under these plans. The money doesn’t yield great returns as it’s invested in debt funds. However, the risks can be managed more easily. The sum assured is actually not that high.

Unit-Linked policies- Compared to traditional forms of life insurance, the risk is much higher with this type of unit-linked products. The policyholder needs to bear some other associated charges, but he gains exposure to equity and obtains a fair growth of his money as against a higher return. These plans even allow money to be withdrawn partially that can be utilized for coping with the financial challenges whenever they surface. Death benefits are provided when the policyholder passes away within the tenure, but the guaranteed returns are provided when he survives before the policy period.

Maturity Benefit from life policies

Upon maturity of a policy, the benefits can be claimed by the policyholder. The completion of the plan tenure entitles the policyholder to receive a variable amount for ULIPs and other products linked with the market performance alongside the principal amount. However, for achieving the variable benefit, the policy needs to be concluded according to the pre-set terms. For traditional products, the owner will be entitled to receive the fixed amount only. The benefits that provided on maturity usually comprise of the sum of premiums that have been met during the entire policy tenure and the other return benefits stated in the paperwork.

The maturity benefits yield a sum of money that increases each year but is restricted to the overall premiums paid. That’s one reason why these plans are considered to be both a coverage benefit as well as an investment option. The corpus exhibits a uniform increase and the entire amount is paid out at the end of the maturity term.

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