Section VI: Income Tax and Your Financial Planning

• Ques: Be a wise saver, borrower and investor
• Ans: Key points:
  • Always try and save 25%-30% of your income except retired senior citizens.
  • Build your asset first (house), then indulge in expenses (car).
  • Borrow within your limits, this will keep your financial cost low (personal loans/credit cards are high cost funds best used only in emergencies) and save money for future needs.
  • Earn more to save more; because cutting expenses is difficult.
  • Leave the comfort zone and work hard in productive years to save for rainy/retirement days. KAL KARE SO AAJ KAR.
  • Financial independence - all major members of family should earn/work.
  • Do not wait for best opportunity; rather do your best now in whatever you do. Do not stay idle.
  • Invest in tax efficient instruments like PPF/MF/ELSS to save on taxes, instead of NSC/FD/BONDS.
  • Do not finance your major child without any limits; let him/her learn to be self-sufficient as early as possible. Let them borrow and pay for their education/car/home loan and you save for your future years. This is more tax efficient, gives financial discipline and independence to all.
  • Invest for long term to save on transfer costs i.e. brokerage, stamp duty, taxes etc.