Want to reduce your taxable income to Rs 5 lakh? Here’s a list of all deductions you can claim

The Interim Budget 2019 introduced some goodies for those earning below INR 5 Lakh per year. So, if your annual gross income ranges between INR 6 to 11 lakhs, you can now try and claim certain tax deductions in order to reduce your taxable income. With the low and middle income group in mind, the Interim Budget 2019 put forth a proposal under Section 87A on full income tax liability for those earning up to 5 lakh taxable income for FY 2019-20.

Before we begin, a quick primer on income tax – which is calculated as follows:
* The sum of all sources is added up to calculate gross total income
* Addition of deductions and other exempted allowances are subtracted
* The net result is termed as the taxable income

It is the above resulting figure that decides the 100% tax rebate as per the 2019 Budget proposals. Now, let’s move to the deductions available (to most individuals) under the Income Tax Act:

1. Income Tax Deductions of Investment under Section 80C
A popular Income Tax Deduction method lies under Section 80C, that allows investments in specified instruments.
These can include:
PPF accounts
Tax Saving Mutual funds
Tax Saving Fixed Deposits
National Savings Certificate
Repayment of Principal on Housing Loan
Premium on Life insurance policy
Equity Oriented Mutual funds
Contribution to Employee provident fund

2. Income Tax Deductions for contribution to pension funds under Section 80CCC and 80CCD
These are income tax deductions which allow payments (of any amount), helping in the initiation of annuity plans of any insurance company receiving pensions. The person is allowed a deduction for the same amount paid under Section 80CCC.
If the person makes the contribution to a notified pension scheme of the Central Government like the National Pension Scheme (NPS), they too are allowed a deduction under Section 80CCD.

3. Income Tax Deduction for Interests on Savings Account under Section 80TTA
A deduction of Rs. 10,000 under Section 80TTA (Chapter VI-A) can be claimed from the interest earned on your Savings Bank Account. This interest income is added under ‘Income from Other Sources’ and then a deduction is provided.

4. Income Tax Deduction for Interests on House Loans under Section 24
Under Section 24, a person with any home loan is allowed to claim deductions for the interest levied on it. It is vital to understand that the deduction is for the levied interest amounts, and not for the paid ones.
Furthermore, under Section 80C, the principal amount of Home Loan repaid is also allowed a deduction.

5. Deduction for Investment made under an Equity Saving Scheme under Section 80CCG
Also known as the Rajiv Gandhi Equity Savings Scheme, this income tax deduction is allowed to all who invest in listed shares or listed mutual funds in a given financial year. The deduction claim includes up to 50% of the amount invested. This is also subjected to a maximum of Rs. 25,000 only.
It is also important to note that this deduction is only applicable for first time investors with a lock-in period of 3 years from the date of acquisition.

6. Deduction for payment of Medical Insurance Premium & Health Check-up under Section 80D
If a person makes any payment for a medical insurance premium either for themselves, their spouse, or their children, they are allowed to claim an income tax deduction for it under Section 80D. This deduction is dependent on whether the individual insured is a senior citizen or a non-senior citizen.
Further, if any amount has been paid for preventive health check-up, deductions are allowed for them as well.

7. Income Tax Deduction for Disability under Section 80DD and 80U
Disabled individuals are allowed deductions under Section 80DD. Dependent family members of disabled persons are allowed deductions under Section 80U. These disability deductions are also defined in the Income Tax Act.
Income Tax Deduction for Treatment of Specified Diseases under Section 80DDB

8. Income Tax Deductions are also provided for treatment of specific diseases for individuals with the disease or for those dependent on the diseased. The deduction is allowed for the actual amount paid for the treatment or a minimum amount of Rs. 40,000 or higher.

9. Income Tax Deduction for Interest on Education Loan under Section 80E
A person is allowed to claim an income tax deduction under Section 80E for the Repayment of Interest on Home Loan taken for Higher Education of Self, Spouse or Dependent Children.
However, it is necessary to understand that this deduction can be claimed only for the repayment of interest on education loan and not for the actual principal amount of repayment. An advantage of this deduction is that there is no maximum limit on the amount to be claimed.
This Deduction is allowed for all Education completions in India as well as outside India.

10. Income Tax Deduction for Donations under Section 80G, 80GGA, 80GGB, and 80GGC
A person can claim income tax deduction for any donation made during the given financial year.
Deduction under Section 80G is a general deduction while the deductions under Section 80GGA, 80GGB & 80GGC are specific deductions. Section 80GGA includes Donation for the purpose of Scientific Research or Rural Development whereas Section 80GGB & Section 80GGC include donations towards all registered Political Parties of the government.

11. Income Tax Deduction for Rent under Section 80GG
If salaried employees who pay house rent, and have no deduction claims of rent (like the HRA exemption) under any other Sections (of the Income Tax Act), then they can claim a deduction under Section 80GG.
Deductions are key income saving tools. With the help of such deductions and exemptions offered by the government itself, there exists a substantial chance of reducing your overall tax payments and maintaining your acquired incomes.

The Winners and Losers in India’s Budget 2019

Prime Minister Narendra Modi’s government announced on 1st February an interim budget likely to boost his government’s popularity and woo voters in time for the 2019 General Elections. The budget, delovered by interim finance minister Piyush Goyal, includes several big announcements likely to benefit rural India and its lower middle-class populace. So let us have a look at who are clear winners in this budget announcement and who stand to lose the most through it.

Winners

Farmers
India has its heart in its rural regions, with farmers forming a large chunk of the population. No surprises then, that the Modi government has come up with the Pradhan Mantri Kisan Samman Nidhi, a 750-billion-rupee farm income support program. It’s a basic income scheme for farmers under which those who own up to 2 hectares of farmland will receive ₹6,000 every year. The amount will be directly transferred to their bank accounts in three instalments. The average farm size in India is about 1 hectare, so this scheme is likely to help about 120 million land-owning farmers across the country.

Workers
After farmers, India’s informal sector workers are the clear winners in the budget. The government announced a “mega” pension program for the workers with income below ₹ 15,000; a monthly pension scheme of ₹ 3,000 to be given to these workers after they retire at the age of 60. This is a huge step because this scheme would benefit nearly 100 million Indian workers, who often have no job security or social benefits as they are employed in small enterprises. The scheme would involve a monthly contribution from the workers, of course, but the amount is minimal: ₹ 100 for those applying to the scheme at the age of 29 and just ₹ 55 for those enrolling at the age of 18.

Tax-payers
Salaried employees earning up to ₹ 5 lakhs per annum are exempt from paying income tax, and those earning up to ₹ 6.5 lakhs will not need to pay tax if they invest in provident funds and prescribed equities. This is a major relaxation from the previous income cap of ₹ 2.5 lakhs, and it’s likely to benefit almost 30 million middle-class taxpayers.
The government is also set to provide tax relief to people owning more than one house. Currently, if you own two homes, assuming you earn rent from one of them (regardless of whether you do or not), the rent is taxed. The newest budget does away with this rule, although if you own more than two houses, the clause applies for the houses other than the first two.

Real estate sector
The real estate sector has a chance to rejoice as the government announced new measures to boost the buying of homes. During his budget announcement, Goyal promised a home for every person in the country and proposed the allowance of investments of ₹ 20 million from capital gains for buying two residential houses rather than the current allowance of only one. The administration has also increased the period of taxing unsold inventory in real estate to two years.

Rural India
The budget involves increased spending on animal husbandry and fisheries, and an interest subvention plan for small and medium-scale businesses. The former would definitely benefit the people of rural India other than farmland owners, and the latter is likely to be helpful for companies with exposure to the villages, including motorcycle companies and others with interest in India’s villages, like Larsen & Toubro Ltd.

Losers

Startups
The startup community of India had high expectations from this year’s budget announcement, but they will clearly be disappointed. The hopes for a faster and easier method for license approvals as well as expectations of an increase in funding, especially for new tech like AI and blockchain, apparently proved to be futile. There was no move to help the startup community’s skills crunch or increase its funding.

Bond Holders
Since most of the above schemes have been done at the expense of India’s fiscal deficit, Modi’s government will breach its fiscal deficit target this year, with the budget gap at 3.4 percent. This is the second year in a row that it has not met its target, and this is likely to affect bond holders if Moody’s or S&P downgrade India’s credit rating.

Farm Labourers
Most schemes for farmers focus on owners of farmland, but tend to ignore rural labourers who don’t actually own any land, and this year’s budget seems to be no different. Landless farmers are not going to benefit from the Pradhan Mantri Kisan Samman Nidhi, as they won’t be entitled to the annual support of ₹ 6,000. These farmers are usually extremely poor, and they are, unfortunately, some of the losers in this year’s interim budget.

Defence
Although the amount allocated for the Indian defence has increased in rupees (from ₹ 2.85 trillion last year to ₹ 3.05 trillion this time), the amount in dollars is less because of depreciation. The $ 44.5 billion last year has reduced to $ 40 billion this year. Most of the allocated budget is spent in recurring costs, which reduces the money available for new weaponry.
The budget announcement has made several people happy, and left some dissatisfied, as with any other budget. Overall, the schemes for farmers and the middle class seem to be a step in the right direction, but the startup community has apparently been left disappointed.

Budget 2019 Summarized: All Schemes

India’s Interim Budget 2019-20 was announced by Minister of Finance, Corporate Affairs, Railways and Coal, Piyush Goyal on 1st February 2019. Highlights include an annual income scheme for small and marginal farmers, tax benefits for the middle-class, a “mega” pension scheme for workers in the unorganised sector, reforms in stamp duty and more. Here’s a summary of all the schemes announced under the Interim Budget 2019.

Pradhan Mantri Kisan Samman Nidhi Yojna

Under this new scheme, a direct annual income of ₹ 6,000 would be provided to farmers owning up to 2 hectares of land. The money would be given directly to the farmers in their bank accounts, in 3 instalments of ₹ 2,000 each. The first instalment is to be paid by 31st March 2019, meaning the scheme is to come into effect almost immediately. The scheme is expected to benefit nearly 12 crore small and marginal farmers and their families. The government has set aside a budget of ₹ 75,000 crore for this.

Pradhan Mantri Shramyogi Maan-dhan Yojna

Reportedly one of the largest pension schemes in the world, this is an initiative to provide a pension of ₹ 3,000 per month to workers of the unorganised sector, with an income of up to ₹ 15,000. It will supposedly benefit nearly 10 crore workers throughout India. The workers would have to contribute a marginal amount towards the pension per month. The amount is ₹ 100 if they are applying at 29 years of age and only ₹ 55 if they register for the scheme when18 years old. The government has allocated a budget of ₹ 500 crore for this scheme.

Rashtriya Kamdhenu Aayog

The scheme has been set up to improve the sustainable genetic upgradation of cow resources and to enhance productivity of cows. A budget allocation of ₹ 750 crore has also been made towards the Rashtriya Gokul Mission.

Development of Fisheries

In order to give better attention to the development of fisheries in India, the government will create a Department of Fisheries. Through this initiative, the government wishes to promote the livelihood of around 1.45 crore people, who are dependant on this sector.
Moreover, as a part of the budget, Goyal announced a 2% interest subvention to people pursuing animal husbandry and fisheries who avail loans through the Kisan Credit Card. Further, a timely repayment of the loan would result in an additional subvention of 3%.

Tax benefits

Taxpayers having an annual taxable income of up to ₹ 5 lakhs will be exempt from income tax, according to the interim budget of 2019-20. Moreover, individuals with an income of up to ₹ 6.5 lakhs will not need to pay income tax if they invest in provident funds and prescribed equities. Additional tax deductions such as interest on home loan up to ₹ 2 lakh, National Pension Scheme contributions, medical insurance, education loans, etc. have also been provided. The total tax benefit is reported to be nearly ₹ 18,500 crore, benefitting around 3 crore taxpayers belonging to the Indian middle-class. In addition to these tax benefits, standard deduction has been increased from ₹ 40,000 to ₹ 50,000 for salaried employees, providing an extra benefit of almost ₹ 4,700 crore to 3 crore taxpayers in India.
New tax exemptions have also been announced for homeowners. Where currently, income tax is expected to be paid on notional rent if an individual owns more than one house, the new budget gives an exemption for a second house as well. Also, the TDS threshold on home rent has been increased from ₹ 1.8 lakh to ₹ 2.4 lakh, and the threshold for interest income from banks and post offices has been increased from ₹ 10,000 to ₹ 40,000.
Other tax related reliefs, which are mostly procedural, have also been announced. Income Tax Returns will now be processed within 24 hours, and refunds are to be paid immediately. Within 2 years, almost all assessment and verification of Income Tax Returns will be electronic, done without any intervention by officials and completely anonymous.

Rural Allocations

Enhanced allocations have been made for rural schemes like MNREGA and the Gram Sadak Yojna. ₹ 60,000 crore has been allocated for the former whereas ₹ 19,000 crore has been allocated for the latter. The Finance Minister said that additional allocations could be made if needed. A promise was made to provide all households with electricity by the end of March 2019 with an announcement that 143 crore LED bulbs have already been provided. A healthcare program, Ayushman Bharat was reported to have benefited over 10 lakh patients already, giving free medical treatment to people and also medicines at affordable prices through the Pradhan Mantri Jan Aushadhi Kendras.

Defence

The defence budget witnessed an increase this year to over 3 lakh crore rupees from last year’s 2.85 lakh crore rupees. The government also announced that it would provide additional funds for defence, if required.

Other schemes

In addition to all these, some other schemes have also been introduced. They include the scheme for a single window clearance which is to be made available to filmmakers and an anti-camcording provision in the Cinematography Act to fight piracy. Social schemes include the government’s plan to build 1 lakh digital villages, a program to give 8 crore free LPG connections to households, an increase in MSP by 1.5 times the production cost for all 22 crops, and a committee under NITI Aayog for notified and semi nomadic tribes.

Financial Wellness in India and the Technologies Aiding It

There’s no stress like financial stress. Money plays a very important role in our lives and not having enough money could disrupt our health, both physical and mental. Not to forget the impact it would have on the performance at the workplace. In the light of increased workload and pressure, employers are now taking the financial wellness of their employees very seriously.

What is Financial Wellness?
Financial wellness refers to the overall health and stability of an individual in monetary or economic terms. It plays a key role in keeping individuals healthy and happy, and an increasing of companies are making it their top priority today. The average worker today, before even starting his job typically brings with them a huge debt in terms of college loans and personal loans that need to be paid off.

Organisations have now begun taking an active interest in improving the everyday financial situation for their employees. This need not be directly in the form of money. Food vouchers, sponsored trips or even simple spa and movie tickets are given out regularly as morale boosters, and they’re working.

How is Financial Wellness implemented and what are the technologies aiding it?
Ever since the onset of online wallets and digital payments, organisations have found it easier to give out benefits and bonuses. Sodexo meal coupons for example, have been adopted by almost all major corporates and are accepted at almost every eating joint in the country. The result? Flexible meal plans plans, more variety for lunches, and increased consumer spending – often resulting in higher happiness and engagement levels. Sodexo coupons are a win-win situation for both the employers and the employees as it saves them a large amount of money that would have otherwise been deducted as tax. The concept has become extremely popular and Sodexo is now the most widely accepted meal card.

Paytm too has rolled out a food wallet feature that is competing head to head with Sodexo, with similar features and benefits. Employees can now eat at KFC, PizzaHut, Burger King, or Taco Bell, while the Paytm food wallet also allows them to carry out their monthly grocery shopping at Big Bazaar.

Companies are also issuing corporate credit cards to reimburse any excess expenses carried out by the employee for the organisation. This could include travel expenses and client meals. Several banks, including State Bank of India, and ICICI Bank have extended their support to a prepaid card model. Expense management brand Happay has also created prepaid cards for business purposes, so that employers can get their money reimbursed easily.

Multiple credit-based companies are also trying to ease the financial pressure of employers and providing loans and salary advances without any added expense.

AmazonPay and FuturePay have partnered with EarlySalary in order for you to shop at the end of the month, without the impending thought of paying immediately. Another app – Simpl, allows people to collect all their online bills so that they can pay the amount in full at the end of the month.

EarlySalary is pioneering the concept of a salary advance to the mass market:

The model focuses on an instant salary advance that lets you pay off all piled up bills, but extends to far more uses – for example, you could splurge it on that dress you have been eyeing for a long time.
Users have a dynamic borrowing limit, depending on their needs, where they can pay back the money in equal monthly installments (EMIs).
Your child’s school takes only bi-annual payments? No problem, the EarlySalary School FeES feature allows you to pay off the entire amount in one go through a salary advance. The borrowed money can be paid back in installments without any additional charges.

Financial Wellness Is Crucial
Financial wellness directly impacts employee productivity. It isn’t rocket science to guess that stressed employees will not perform optimally at the workplace. No surprises then that organisations are also encouraging employers to take meditation and yoga classes. Some companies even offer to reimburse a part of their employee’s gym fees as a sign of encouragement and support. Once employers start promoting and helping with financial wellness, employees interaction and engagement sees an increase. Then there’s a host of other benefits:

Employer costs, such as medical expenses reduce.
The average retirement age also increases if you’re dealing with healthier employees.
Fewer work days are missed if a financial wellness plan is in place.
Perhaps most importantly, low stress on employees lowers attrition rates as well.

Financial Wellness is a top concern for most companies today, with employers trying to fight the financial stress and burnout of their employees head-on. From monthly bonuses and team outings to family and child support, companies have come a long way on financial wellness is concerned, and this would not have been possible without the tech easing the whole process.

5 Reasons A Salary Advance Is All We Need

For a lot of students fresh out of college plunging straight into the work environment, it can be understandably difficult to keep up with all the added expenses. Employees often find themselves either borrowing money from home or living a very frugal lifestyle towards the end of the month. This isn’t very uncommon – setting yourself up in a new city can require a lot of extra cash and this is where the concept of a salary advance would really help. But it isn’t just relocation that can render you short on cash – salary advances can prove useful in a variety of other situations. In case it wasn’t obvious – a salary advance involves paying an employee a part of his pay in advance and covering it up in later installments.

5 Reasons A Salary Advance Is All We Need

For a lot of students fresh out of college plunging straight into the work environment, it can be understandably difficult to keep up with all the added expenses. Employees often find themselves either borrowing money from home or living a very frugal lifestyle towards the end of the month. This isn’t very uncommon – setting yourself up in a new city can require a lot of extra cash and this is where the concept of a salary advance would really help. But it isn’t just relocation that can render you short on cash – salary advances can prove useful in a variety of other situations. In case it wasn’t obvious – a salary advance involves paying an employee a part of his pay in advance and covering it up in later installments.

#1 Convenience and flexibility
It is no secret that sanctioning a loan from a bank is no small task. A salary advance is much more convenient with its procedures, and is flexible with the amount and interest rates as compared to a loan. In most cases, the salary advance is deducted from future pay-slips which makes the repayment easier. You don’t need to save up the money separately for the repayment of the advance. You can also borrow any amount – it need not be a very hefty sum, which can be paid off by the succeeding month itself. Apps like EarlySalary have a dynamic borrowing limit, allowing separate limits for all kinds of expenditure. So the salary advance does not require immense or detailed planning.

#2 Unexpected Emergencies
Not everything is predictable. A sudden sickness or hospitalisation can throw our expenses off-track. During such times, instead of breaking into fixed deposits or taking an emergency loan with a high interest rate, a salary advance can seem like a far better option. This helps avoid huge expenditure cuts in the future. In fact, the money need not be used only for emergency cases. A salary advance can help you get started even on long term plans such as buying a house or a car. A salary advance helps you pay off a large and sudden amount of money, be it hospital bills, credit card bills, or money for a vacation.

Shop now, Pay Later. EarlySalary helps with any untoward expenses.

#3 Easy repayment
A traditional personal loan from a bank often comes with strict and stringent payment dates regulated by the bank. The lack of money at such times often results in higher EMIs (equal monthly installments) with every succeeding defaulted month. Salary advances, on the other hand, have an easy repayment scheme. More often than not they are directly deducted from your pay cheque itself. If not, the repayment schemes are aligned with the payday to avoid any lack of cash during the repayment period.

#4 Quick disbursal
Contrary to the practice at banks, salary advances do not require much time and are not a tedious job. The weeks of paperwork and the time taken to sanction and get loans approved takes a long time, and hence may not be the best idea when you are in urgent need of some cash. Salary advances are much quicker since it basically gets rid of any work with a middleman. There are lots of apps available today which help with securing a Salary advancement.

#5 Low interest rates :
Salary advances have very little interest rates. This helps avoiding and piling on to the already existing cash crunch that you may have. Salary advances also levy interest rates only on the money that is drawn and used, as opposed to banks where the interest is levied on the accumulated amount as soon as it is disbursed.

Salary advances benefit both, the employer and the employee and prevents employees from going into any cash crunches from their early days of employment. Salary advance applications are making the process more seamless and hassle free with their instant approval and quick cash transfer. At EarlySalary, all the benefits of a salary advance are rolled up in two one nice package – with merchant integrations (such as Amazon and schools) in-built to make the process faster and more convenient. Get started here!

Decoding PwC’s Employee’s Financial Wellness Survey 2019

PwC’s 8th annual Employee Financial Wellness Survey was conducted during the last two weeks of January 2019. It tracks the financial and retirement well-being of working U.S. adults nationwide. This year it incorporates the views of 1,686 full-time employed adults. Participants have been categorized by generation using the following age groups: 18-22 (Gen Z), 23-37 (Millennials), 38 to 58 (Gen X), and 59 to 75 (Baby Boomers). 

~ PwC’s 8th Annual Financial Wellness Survey, 2019

The assessment of this year’s PwC’s Financial Wellness Survey clearly reveals that employees are openly coming up about their financial worries related to cash flow and debt challenges. Though unemployment rates are low and slight increases in wages have thrown some respite on the employees, they still are finding it hard to save and to expend on their cost of living. The other side of the tug of war has employers who need to have a stern look at employee welfare programmes to maintain a balanced game. As such employee absenteeism and turnover, and dissatisfaction on a personal level has to be accounted for and addressed by addressing the variegated challenges being faced on one hand and motivating employees to improve the financial well-being and retirement readiness.

Employees indicate that financial wellness means being stress-free and achieving financial stability:

  • About 34% of the employees feel that not being stressed about their finances is financial wellness to them, while 18% feel to be debt-free is what constitutes financial wellness. 
  • 16% feel that having adequate savings and not worrying about unexpected expenses is financial wellness, while 12% feel it is financial freedom to make choices to enjoy life. 
  • A smaller percentage – 4% – feel it to be in the freedom to retire when they want. 
  • Demographically too differences were noted when it came to the stress-free strata of employee populace. About 38% of millennials, 34% of Gen X, and 25% of Baby Boomers felt that they led a financially stress-free life. 

Employees are finding it challenging to cover everyday expenses despite the fact that employee spending contributes as one of the major movers in the economy. While economic growth globally has been stupendous, jobs growth hasn’t kept up. An increasing number of youngsters are incurring debts to meet their personal expenses and employees are carrying balances on their credit cards. The cost of higher education is rising beyond the capacity of many in the salaried class, further adding to their debt. The old, understandably, are more worried about their after retirement expenses – especially health expenses. 

“We believe that employee anxiety will continue to mount without a greater emphasis on increasing savings and improving longer-term financial well-being.”

~ PwC survey report

Financial stress as the prime factor

As per the survey: 

  • Financial or money matters have been stated as the top cause of stress at 59%, 
  • Followed by the job at 15%, 
  • Relationships at 12%, 
  • Health concerns at 10% and, 
  • 4% contributed by other causes. 

According to the report, the difference between a stressed and an unstressed employee is visible in them living on extreme ends of the spectrum. Stressed employees are more likely to have credit card balances and struggle to pay even petty expenses nearly four times more than their unstressed counterparts. Due to stress, these employees are likely to say nearly five times more than they face distraction at work due to their finances. 

An increasing number of employees are claiming to work during their retirement period for their inability to save enough in the present. They have saved less and are intending to raid retirement plans just before retirement. 

The survey shows that more than 80% of the organisations today encase a wellness programme for their employees, but most of these programmes are traditional retirement education and planning programs lacking focus on the financial aspect of stress. 

Post-Retirement plans

More than 80% of the employees feel that they will be working post-retirement. And about one-third feel the need to work after retirement to support themselves financially. The definition of retirement is evolving to include longer periods of unemployment and a more gradual transition into retirement. These changing parameters need to be looked upon and researched to be taken care of well in the wellness programmes for the employees. 

Many employees are now planning to postpone their retirement for they think they haven’t saved enough and due to growing concerns around healthcare costs. Most are uninformed on how to plan their retirement and lack a solid plan. This leads to an increase in stress levels in the present and difficulties in achieving financial stability in the future. Only 43% of the baby boomers planning to retire within the next 5 years are sure about the income they will need to supply themselves during their retirement. These stats are a cause for concern, as they shine light on the level of retirement plans initiated by employers, their inability to deal with employees’ concerns and the need to rethink and replan such programmes for the benefit of employees.

The Curious Case of the Sandwiched Generation

The sandwiched generation aka whose financial expenses are affected due to the care of both their children and parents, find themselves sacrificing their own well being for the ones they care. Millennials and Gen X constitute the majority of the workforce while Gen Z has started to enter the workforce as well. Each of these deal with their own set of issues and problems.

  • 24% of the employees say their employer offers services to assist them with personal finances and more than two-thirds (71%) say they’ve used the services. 
  • The survey also indicates that employees providing financial support to parents or in-laws face additional debt and retirement challenges. About 42% of employees provide financial support to their children over 21 years of age and about half are willing to give up their financial well-being for the benefit of the students. 
  • Millennials who have entered the workspace are already burdened with one or more student loan impacting their financial capability.  

In order to prevent employees from using their retirement plan or savings for meeting current expenses of their parents or children, employers will need to focus not only on individual personal finances, but also on the family unit as a whole such that a balance can be made between emotional decision making and sound financial planning. 

What the Future Holds for these Financial Plans

With digitalisation and expansion of online spaces, employees face the task of determining whom to reach out and whom to trust. A multitude of organisations and online portals are providing a plethora of financial and retirement plans that may or may not benefit the employees. Here, it may be the responsibility of the employer to inform employees about their actual standing and what focus areas they can look to save more for the future. Employers may also need to formulate plans on the lines of the individual as well as family welfare financially. 71% of the employees claim to use these employer-provided services and the numbers have been increasing. Many employees wait for financial advice or seek it personally before they set in to raid the choices. It, thus, becomes incumbent upon the employer to engage employees continually with planning and prevention and intervening when issues are severe and options limited. The employers need to be on their edge in dealing with confusion and concern that hamper the financial wellness of their employees. 

In order to tackle the issues highlighted in our survey, employers will need to take a hard look at their programs to determine whether they effectively address the variety of financial challenges their employees are facing while motivating employees to engage and change behaviors to improve overall financial well-being and retirement readiness.

~ PwC Financial Wellness Survey

Holiday on A Budget: 5 Tips for Making Your Holiday Affordable and Still Enjoyable

Holidays are often an expensive affair, with all the travelling, parties, gifts and everything else that we just have to do. But a budget holiday is not as impossible as it may seem, provided you’re willing to put some time and effort into planning it. There are several ways to save money on your holiday without taking the fun out of it.

We’ve put together a list of 5 tips you can follow to have an enjoyable holiday while on a limited budget.

1.  Make a Budget (and stick to it)

Although it may seem trivial and tedious, this is what helps you save the most money during the holidays. Check how much money you can afford to spend and make a meticulous, detailed plan as to how to spend it. Realising exactly how much you can spend, increases your will to save money. You can strategize your budgeting by assigning priorities and simply cutting out the spends which come in last on your list.

2.  Save on gifting

Holiday gift-giving can get extremely expensive, especially if you have a large family, not to mention your colleagues and friends. Some of the best ways to save money in this case without offending anyone are:

a.    Keep your eyes open for offers

As soon as the festive season rolls in, stores and online retailers alike abound with sales, each competing with the other to give you the best possible deals. Take advantage of this, and buy your gifts via these offers. Sometimes the best offers come during a clearance sale or at the end of a season. There’s no harm in doing your holiday shopping early – you can even buy an expensive Diwali gift for your boss at a “90% off” sale much before Diwali!

b.    DIY is the way to go!

This is by far the best possible way to save money on gifts – make one! It gives an emotional and personal touch which no amount of money spent can ever hope to compete with, and it saves you lots of money in the process! Rather than buying a Christmas card at Archies, you could make a cute card with your best memories written on it. Rather than buying your friend a pen, you could gift them with a scrapbook containing your favourite pictures. DIY gifts always have more feelings attached to them than store-bought ones, and raw materials never cost as much as the finished product!

c.     Alternatives to gifts

Instead of individual gifts for them, consider treating them together. Take them out to dinner, or plan a fun outing they would enjoy. You’ll not only end up saving money, but also enjoy it to the fullest. After all, as one grows older, material gifts matter much less than the gift of precious time spent with loved ones. Of course, there are people you have to give gifts to, like kids, but you can definitely save money when it comes to adults.

3.  Save on travel

Holiday travel gets expensive, and you usually end up spending most on your journey. It’s peak time, and everything from bus ticket prices to airfares shoot up during any holiday. Here’s where you can save in such cases:

a.    Choose your travel time wisely

Ticket prices show vast variation from off-season to peak season, but there’s also a major difference depending on time. Tickets are often cheaper during inconvenient times. For example, a 3:00 am flight ticket from Mumbai to Delhi may cost ₹ 2000, but one at 5:00 pm on the same day may cost ₹ 10,000! If you really want to save money, it’s always better to travel at odd timings. Also, if you’re travelling long distance, prefer night travel as long as it’s safe, thus saving on accommodation.

b.    Walk/Cycle when you can

It’s always better to explore a place on foot, especially if the place you visit is beautiful. Rather than taking random walks to take in the scenery, try to walk to your destination, because after all, walking is free! If the place you’re going to is too far for a walk, you can always hire a cycle rather than anything else. Many cities like Pune have recently come up with pollution-free initiatives, like providing bicycles for rent at low rates.

c.     Buy a travel pass

Most places also have travel passes for those tourists who don’t prefer to walk or cycle. Daily and weekly train or bus passes are usually very affordable, especially if you wish to move around a lot during your time in the city. Different cities have different systems, but they almost always work in our favour when it comes to being frugal.

d.    Travel light

Many flight companies charge exorbitant sums for excess baggage, so it’s always better to travel light. Control what you pack and only take whatever is absolutely necessary for your trip.

4.  Compromise on luxuries

Sometimes, you’ll need to learn to swap a dinner at a fancy hotel for a home-cooked meal. You may have to stay in a traveller’s hostel rather than a 5-star hotel, or swap homes using a service like Airbnb to fund your vacation. You may also need to use public transport once in a while, or travel in economy class rather than business class. But such compromises often make all the difference and save you a lot of future trouble. They also help ensure that you have enough money for another vacation in the near future.

5.  Get Instant Cash With EarlySalary

Despite all your budgeting and careful planning, it is entirely possible you end up with more expenses than you’d have liked. Fortunately, there are services out there – like EarlySalary – tailored to meet exactly this need. India’s first advance salary app – it instantly approves advance cash based on your profile and requirements, directly into your bank account – or even to ecommerce stores if it’s an item you’re purchasing online. Get your advance salary here.

It isn’t too difficult to afford your vacation, fund your holiday, or even take care of sudden expenses, without burning too large a hole in your pocket. Happy holidays!

Millennials Earn Less, Spend More on Themselves During the Holiday Season

Muskan, a 25-year-old photographer, has just ventured into this professional field. Her education field was psychology. But by the end of her masters, she decided to do away with it, and make a career in photography. At 25, where most millennials start earning and supporting their family, Muskan is still living off of her parents’ money. She tried being economically independent, but her expenses were simply too much and she was unable to cut down the standard of lifestyle she had maintained for so long.

With the ongoing festival season, booze, card parties, and upcoming vacations, Muskan found it difficult to keep her head above water. She realised that economic returns from this profession aren’t enough to support her lifestyle, and she had to ultimately approach her father for monetary support, something she doesn’t approve of herself.

Living the good life

Around 50% Indians spend around Rs. 500-1500 on clothing every month! Indian millennials are waking up to more brands everyday, with fashion trends swiftly changing, coupled with an increased brand consciousness. It is not difficult to fathom why their lifestyles are way over their monthly budgets. The pressures of being presentable on the  job are more than ever, and millennials are never ones to shy away from a challenge.

Holiday season leads to more spending, expenses on gifts, parties, drinks, and outfits. Holidays, festivals are mostly the time when financial planning goes for a toss, and every other individual struggles with spending decisions.

Before you know, it is end of the month, and you are frantically waiting for your salary to pay basic expenses like rent, groceries, transport etc.

Dynamic Career Paths

Folks from this generation are more willing to take the plunge more often and pursue their passion. We see a number of engineers becoming writers, civil servants giving up their jobs to pursue teaching, lawyers choosing to do public interest litigation work rather than working for a law firm.

While all of this sounds pleasantly surprising, the economic aspect of things isn’t very well taken care of with such switches. Starting a new career path without prior experience or knowledge amounts to almost no or meagre pay increments. We witness an increased dependence on credit cards, which ultimately leads to a huge statements that are difficult to pay off.

Holidays and its Hangover

The need and importance for a holistic education has risen. With every commodity hitting skyrocketing prices everywhere, education, tuitions and everything in between has started eating too much out of monthly budgets.

Considering the Indian holiday season starts from Diwali in november, and goes on till new year’s, a good chunk of spending can go unsupervised. With such a prolonged festival time, followed by holidays, budgeting can get overlooked.

Following the merry time is semesterly/quarterly submission of school and college fees.  With such an arrangement millennials looking forward to pay tuition fees of courses, colleges might find themselves in a puddle. However, a few financial constraints should never come in the way of  getting access to education millennials deserve.

Loans for short-term payment of fees should also be made available, to take the stress off of their backs. Although, there might be education loans for higher studies, such an option is hardly available on a short term basis for school/college scenarios. A few options such as – EarlySalary provides loans upto 3 lakhs in order to enable seekers to pay their college fees even with the holiday hangover just waning off. The loan repayment method is also easy, with the option of 3-6 EMIs available.

Where do millenials get the money?

Millennials generally tend to incline more towards experiences, gadgets and vacations, rather than savings. Therefore, parties, extravagant vacations and expensive gadgets take precedence with the “YOLO” generation as opposed to a retirement account or building up savings. This doesn’t leave much in their hands at the end, or sometimes even in middle of the month.

There exists enough literature on how detrimental credit cards are for spending habits, and long-term financial planning. In such cases, quick cash from EarlySalary works as the ideal solution. With the platform allowing you to shop from brands like Amazon and Big Bazaar directly by giving you a pre-loaded wallet, it’s never been easier for millenials to spend on themselves without trouble. With instant approvals and zero cost EMIs, there really isn’t much more to ask for.

How are you spending on yourself this year? Let us know in the comments!

Are you Guilty of These 15 Money-Wasting Moves? Here’s How to Stop

We all want to become master of our money instead of being a slave to our habits, but let’s admit – we all give in to a lot of temptations. These temptations may seem fine at that moment because they’re relatively small, however, if you add them all together, chances are, you’re going to find yourself guilty of wasting a significant amount of your hard earned money.

In this post, we’ll explore 15 common money-wasting moves and share the secret of avoiding these mistakes. Some tips need expenditure cuts, and other tips involve grabbing the money on the table that you didn’t realize was there!

#1 Using only one bank account for all expenditures

Money management can get tricky if you carry out all expenditures from one checking account, as often we cannot trace what’s gone where. To avoid muddling up finances, open a second account. You can allocate a fraction of your income in one account to cover all the basic expenses like rent and bills and another fraction for spending over leisure.

#2 Reserve Management

If there is one thing that stresses us all, it is our fear of drowning in debt repayments if we’re run out of our salary. Getting out of debt involves sustained disciplined spending. You can even get credit counselling to get personalized lending options. This may involve refinancing or debt consolidation which can save the interest cost that you may lose.

If you’re looking for a salary advance, check out EarlySalary – India’s first advance salary service featuring instant approvals, direct transfer to your bank account (or even e-commerce wallets), and low fees. It’s a fairly neat way to avoid high-interest debt.

#3 High insurance premiums

Many of us shell out huge chunks of our monthly pays on insurance premiums. Because, just like other essentials, we need insurance, right? Sure we do, but the insurance market is a crowded one, so it is important to find the policy that best suits you. Tax deductions and credits that you do not claim is money wasted. Take a professional’s help, compare policies & maximize your tax savings.

#4 Overspending on monthly bills and overdue

Our lives are busier than ever and among the many things that we often miss out on is the monthly payments on them. Neglecting some payments like irregular credit card bill payments may cost significant late fee charges and even downgrade your credit scores. Consider automatic payments to avoid such situations or you may even set reminders.

#5 Credit Card Fees

Many card users extend their spending limit and pay for it even if their expenditures never reach those limits. Do not use credit cards which have monthly or annual membership fees unless there is a worthy rewards program that can make up the difference, whether in terms of cash back, airline miles, or other rewards.

#6 Poor Investment

All that shines is not gold and the same is true for investment. Investment in the wrong policies can eat into your overall gains, and when you compound that over 30–40 years, your savings can even go south. You miss on the power of compounding returns if you keep it idle. However, it is critical to do some thorough research before putting money in any policy. If you cannot do that yourself, take professional help and identify the right time to invest.

#7 Impulsive Shopping

Marketing tactics are there to lure you into buying stuff that you do not need. To avoid getting tricked, plan your spendings, carry cash instead of cards and most importantly – think twice before making any purchase. If you do need some money for important purchases though – remember when we said EarlySalary even transfers to your e-commerce wallets? Check it out here.

#8 Electronic Luxuries

We all love to swank our electronic luxuries like latest phones, paid apps, digital subscriptions, etc. but sometimes this love for gadgets goes overboard and we end up regretting when we don’t use them. To avoid this, learn to resist urges and beware of free trial offers because if you forget to cancel in time, you could be wasting money for nothing.

#9 Brand Obsessions

If you’ve got a bunch of clothes collecting dust in your attic, you are guilty of wasting money on brands and fashion fads. Remember that quality clothes in classic designs reduce your clothes’ average price.

#10 Extended Warranties

Everytime you buy an electronic device, retailers go all out & hard sell you extended warranties at inflated costs. It is better to do review whether it is even needed because mostly buying a used or new replacement for your item, or repairing it is cheaper.

#11 Grocery shopping

How many times do you end up throwing extra food?  Delayed shopping & shopping with time constraints can help you cut costs of those extra items by getting you into a habit of buying more appropriately to fit your needs.

#12 Spending for the sake of coupons

If consumers think they are smart, marketers and retailers are smarter. They often trap buyers into overspending to avail of cashbacks/ coupons or gifts. It is important to compare and evaluate purchases to avoid being tricked.

#13 Wasting money on Dine-outs

If on an average you are spending 50 bucks per week on takeaways or dine-outs, it adds up 26,000 bucks in 10 years. Homemade food is not only cheaper but also a lot healthier.

#14 Smoking/ Drinking

An average smoker spends $2,292 (or about Rs 1.5L) per year and you may be shocked to find the price tag of the diseases that will follow. You are not losing days from this valuable life but also your hard-earned earnings. So stop before it’s too late.

#15 Indiscriminate use of gas

Many drivers fall for pricey premium fuel when their vehicle needs regular fuel. Opt for carpool, switch to fuel-efficient vehicle, consider walking or biking & maintain your vehicle to reduce fuel costs.

To conclude, use your wisdom, compare costs and most importantly learn to differentiate between needs and wants if you want to stop wasting money.

2019 Personal Financial Goals- Starting Fresh This New Year!

2019 is around the corner and most of us have already made new year’s resolutions. While losing weight or reducing the number of beers per week is admittedly important, setting a financial goal for the new year to come is just as important. Making a clear financial goal for the year is the equivalent of a having a meal plan on paper – it tells you exactly what to do when.

Financial Plans – The Biggest Misconceptions

One of the biggest misconceptions about making a financial plan is that you will be strapped for “fun” cash. The belief is that you will have to cut out on all your fun activities such as eating out, going out on vacations, etc. Contrary to this belief, you might be able to go out more often and enjoy a lot more as you know you’re being financially responsible.

How to Make a Financial Plan for 2019?

There are two ways you could make a financial plan for the upcoming year 2019.

  • If you’ve already got a financial plan you followed in 2018, all you need to do is update certain clauses according to the progress you’ve made.
  • If you haven’t made or followed a financial plan for the previous year, don’t worry, we at Earlysalary will do just that for you.

The thing about financial plans is that they are supposed to be tailored for you based on a lot of factors such as income, expenses, age, time to retirement, and finally, life goals. Here, we’re going to give you a rough idea of what sub-goals you should have in your financial goals for 2019.

Financial Plan – Your Personal Basket of Items

There are various aspects to be taken care of while preparing a financial plan for the entire year. Here, we’ve highlighted a few of them.

  1. Work on Saving Maximum Taxes

As a salaried individual, you have to pay taxes. The Income Tax Act of 1961 has a lot of provisions for deductions and exemptions. Use these provisions to maximize your tax savings. However, remember that tax-saving investments aren’t usually the best choice to park your funds for wealth creation, so invest only with the intention of saving tax.

  1. Maximize Savings & Create an Emergency Fund

If you’re on a fixed income from one job, the most important thing would be to save as much as you can. One must remember that “savings” is different than “investments”. For the sake of clarity, your investments aren’t liquid and won’t help you when you need money – your savings will. Hence, create a budget that focuses on maximizing saving.

  1. Track Your Expenses

The trick to maximizing your savings lies in tracking down your expenditure to the last rupee. We’re not asking you to live frugally – meet all the expenses you need to sustain your lifestyle, but we’re insisting that you track all your expenses. There are a lot of apps that help you track your expenditure through your smartphone. If you’re uncomfortable using your phone for this purpose, you could also get a pen & paper and start jotting down your expenses.

The idea behind writing down your expenses is that you will probably notice wasteful expenditure and will hopefully cut down – that money goes to your savings!

  1. Increase Your Financial Literacy

While one important part of financial planning is “doing”, learning new things is often the part we ignore. In the world of finance, nothing ever remains constant. Tax rules, investment avenues, expenses, etc. are all changing rapidly. Every year, the Indian Government comes out with a Budget which also outlines changes in taxation rules. Tax rules are your best friend, always stay updated.

  1. Invest As Much As You Can

Investments are great, in the sense that they can become a major source of passive income. For example, a mutual fund deposit worth 500,000 INR earning an average interest of 10% p.a., can yield you 50,000 INR per year. While this income is taxable, investing in specified avenues can help you save tax. As a general rule of thumb, you should be investing at least 20% of what you make every month. So if you make around 100,000 INR per month, at least 20,000 INR should be going towards your investments.

The Bottom Line

Planning your finances is paramount to leading a financially stress-free life. However, planning is just the first and easy part of the process.

Sticking to your budget and overall financial plan for the year is not as easy as it looks – it’ll take a couple of months to get everything on track, especially if you’ve been a spendthrift in the past. Do not despair if you think it’s too difficult – start with baby steps. Doing something according to your plan is much better than abandoning the thought completely.