Budget and Financial Planning

The dream budget is finally announced and some important measures in personal finance area are;

  • Income Tax rate slabs unchanged
  • Health Insurance premium exemption under 80D increased to  Rs25,000/- and for senior citizens to Rs 30,000/-
  • Transport allowance exemption increased from Rs800/- to Rs 1,600/- per month
  • NPS contribution exemption under 80CCD Rs50,000/-
  • Option to employees for either EPF or NPS
  • Wealth Tax abolished

 

Many individual taxpayers were expecting more tax saving avenues. We are of the view that it is a better not to get addicted for tax savings products. In fact investment through tax savings products i.e Insurance and Fixed income products have not helped wealth creation. Earlier after every budget, the financial product manufacturers    announce incentives(Bonus),sops (Foreign trips) and club memberships  for their distributors  and relationship managers  to increase sales and achieve targets .The distributors  in turn are  after the  gullible prospective buyers  to push their products for tax savings. The JFM (January,February and March) fever catches up. By the time the investors realize that the products sold to them in guise of tax saving are not appropriate for them, it is already regret time.

What should an investor do? Many do not have knowledge and time to understand the complexities of financial products. If you can not DIY(Do it yourself),you should learn from medical profession. When we fall sick, we do not go directly to medicine shop to buy medicines.We go to a Doctor who does the diagnosis and prescribes the medicines.Similarly, we should go a finance professional who can guide us correctly. Unfortunately there are many who call themselves as financial advisers (Relationship managers!) without having the requisite knowledge and experience.They are chemists who call themselves Doctors. You should devote time to find the right financial planner, preferably SEBI Registered Investment Advisers by asking what, how and why of their activities?

 What?

A good financial planner should be able to transform the  financial health and emotional well being of clients.

Long term financial health :To achieve long-term financial health, one needs to transform the relationship with money by making permanent changes in attitudes, beliefs & behaviors and learning to reframe money script  to impact the ability to save for the future.

Well being: An integrated and balanced approach to life includes financial, emotional and physical aspects. Since more than 90% of all financial decisions are made emotionally, separating financial and emotional well-being is almost impossible. The planner should be able to appreciate these aspects.

How?

A good financial planner ensures;

  • Putting clients interest first
  • Giving sound advice; providing creative solutions
  • Practicing what he/she preaches(Integrity)

  • Educate and update himself/herself regularly on latest developments 

Why?

The financial planner should have non negotiable & permanent core values, should build a culture of trust & unbiased advice,  defend client’s interest and create feel good client experience through process improvements. 

One can’t have well-being without the financial means to support physical health and emotional happiness. That is why Financial Planners should create value by   transforming people’s financial and emotional well-being. The comprehensive financial planning goes beyond building financial independence. It  helps clients  change their destructive money behaviors, clarify goals and achieve the dreams that represent happiness to them. 

Lack of fresh tax savings avenues in the budget provides an opportunity to pause, decide financial goals, take stock of  cash flows, create a contingency fund, take adequate insurance for protection of income, health , accident and properties, making investments simple by asset allocation and rebalancing, ensuring nominations and making a will. It will help you to take charge of your financial life so that you can make a better job of your spending, saving, investing and managing risks in life.If you can not DIY,you can look for a professional and experienced financial doctor who can help you.

Last modified on Wednesday, 10 February 2016 06:39

Prakash Praharaj

Shri Prakash Praharaj has a passion for excellence. He has been awarded two gold medals for securing top positions both in Graduation and Post Graduation in Commerce. He is an MBA with specialization in Finance and marketing. He has been awarded Diploma in Treasury, Investment and Risk Management besides CAIIB from the Indian Institute of Bankers. He is a Certified Financial Planner from the Financial Planning standards Board, India (FPSB), affiliated to FPSB, Denver, USA and Certified Personal Financial Adviser from NISM. He is also a SEBI registered Investment Adviser vide Reg. no. INA 000000045 dated 2nd August 2013.His book "Your Every day guide to Personal Finance and Insurance" has been published by CNBC TV 18 in August 2015.

5 comments

  • Financial Planning

    posted by Financial Planning

    Thursday, 13 August 2015 15:42

    financial planning has gone through a lot of changes and technology also has a huge influence on it. Its better to take suggestions through the experts before investments.

    Report
  • Sujata Aniruddha Sapkal

    posted by Sujata Aniruddha Sapkal

    Friday, 03 July 2015 05:33

    Everybody experience this JFM fever when everybody is just worrying about tax saving,discussing it with every tom,dick and harry and end up getting those so called "Tax saving Schemes" which in long run affect their overall financial well being and goal achievement.

    An eye opener set of information to avoid tax saving rush,and to evaluate other avenues.

    Report
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    posted by billiards game cool maths

    Saturday, 16 May 2015 21:07

    This web site certainly has all of the info I wanted concerning
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  • durga

    posted by durga

    Tuesday, 21 April 2015 12:24

    good and needful article

    Report
  • Shivani

    posted by Shivani

    Sunday, 29 March 2015 04:56

    Very informative!

    Report

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