Budgeting Can Help You To Plan Your Tax

Are you the one to wake-up late and make your tax planning investments only after your employer starts sending reminders?  There are several advantages if you plan ahead, right now in the month of April.

a)      Family budget is a powerful tool available to you that helps you manage your money better.  It helps you plan your cash outflows accurately.  It also helps you to balance (i) your need to save and invest and (ii) your regular expenses and outflows.

b)      You can take your time and research the products well, ask right questions and be a well-informed buyer.  If you are of do-it-yourself type, today internet is a veritable host to myriad options.  However, be cautious about information overload and vested interests.

c)      If you chose to invest in those instruments with underlying volatile assets such as ELSS schemes, you can do rupee-cost averaging through Systematic Investment Plan (SIP) or Systematic Transfer Plan (STP).

d)     Have you noticed that some financial products are taken off the shelf usually on the last day of the financial year and such announcements are made usually in the month of January?  This marketing gimmick is adopted quite successfully by Life Insurance providers.  Such ‘last’ dates always create an urgency in the buyer to latch on to such products under the assumption that ‘if it is going off the shelf, then it must be good’.  This is not always true.  Even if the product is good, is it good for you?  Sales persons are trained to ‘be closing always’ and they have a vested interest in closing a deal as early as possible.  “Going off shelf” is usually a marketing gimmick to help sales persons.

e)      Most of the employers in Bangalore have mid-December or mid-January as the last months to provide them with ‘proof of investments’.  Many a times, your last minute effort is not good enough to get ‘proper’ proof of investment that is acceptable to your employer and thereby you are denied of the exemptions.  Seeking refund from income tax authorities, though is an option, is quite long draw out process.

f)       Your financial plan deserves all the help from you in allowing it to plan your financial affairs.  Help your financial plan and help yourself greatly.

As Napoleon Hill says, procrastination is the bad habit of putting of until the day after tomorrow what should have been done the day before yesterday. You will end up with either ill-fitting or costly financial product in your portfolio with last minute purchases.