“An investment in knowledge pays the best interest.” – Benjamin Franklin

Our knowledge about how to get along with our finances and manage it is a major ingredient which propels our life in the direction we want. This write up on managing personal finance is about adding a few magical points to your pocket which multiplies not only your money, but also ensures security, serenity and happiness in your life ahead.

Assumptions made

1. You are earning pretty decently.
2. You have expenses.
3. You are married and living with your family or intents to get married
4. You have goals related with finance like purchasing a particular variant Swift Desire car in a particular month of a particular year at an estimated cost.

The magical points

1. Your expenses should never be beyond your earnings. If so, you are heading for trouble.
2. However, remember taking loan is a great idea especially for vehicle and for home.
3. From your earnings or income, take 30% for the family expenses of the month, utilise 30 % of your earnings for the repayment of loans, invest 10 % for education, learning, vacations and outings and the remaining 30% for investments (savings).
4. Run the expenses (utilising 30% of your earnings) of the family primarily to feed the necessities and to cater for your comforts. Do not resort to eating, drinking and extra leisure where the returns are detrimental to the overall health of your family members.
5. Take a vehicle loan spanning for a period of 5 years and ensure that you build your house utilising your housing loan with a repayment period of 20 years. The falling interest rates make things more attractive. This ensures the acquirement of a movable and immovable property without actual cash outflow from your hands.
6. The repayment of loans (utilising 30% of your earnings) through EMI is a good choice. Choose the banks and financial organisations which provide loans to you at the lowest interest rates. Link the loan with insurance.
7. The interest money on repayment of housing loan is normally taken into account to fetch you sufficient exemptions from income tax. Hence it can be utilised for saving the tax.
8. Enrich (utilising 10% of your earning) yourself by reading, learning and getting trained. Also you can apportion an amount for your relaxation and rejuvenation through gym, outings and vacations.
9. Your savings part or investment (utilising 30% of your earnings) part is also attached to the exemptions you can claim under the Income tax act.
10. Some aspects and measures to bring about savings in tax and investment for future.

•  For ordinary citizens income tax is exempted for an annual income of Rs 2,50,000/-
• Further exemption of Rs 1,50,000/- can be claimed under section 80 C
• Some investment options are suggested for cover up under 80C
  • A term insurance premium which gives a long term life cover with sum assured crossing a crore.
  • The deductions on the tuition fees of your kids.
  • An equity linked savings scheme which gives you a greater growth.
  • Contributions to employee provident fund.
  • Repayment of principal on housing loans.
• Your contribution to pension fund, 80 CC will ensure a deduction in your taxable income.
• Deduction under 80 D for payment of health insurance.

11.One must do the following investments for income tax deductions, social and financial security.

• A term insurance policy with a long term life cover and greater sum assurance.
• Contributions to employee provident fund.
• Contributions to pension fund.
• Holding a health insurance policy.

12 . Always carry out the other tax saving investments in financial assets/portfolios which tends to beat the inflation in terms of greater rate of returns, example the ELSS.

13 . Youngsters should cultivate the habit of investing in equities especially practice value investing and stay invested for a long time to know the power of money working for you. Remember the long term capital gains arising out of sale of listed shares /stocks is not taxable in the country.

14.  Choose tax free mutual funds and diversified mutual funds for investment after analysing their 1 year, 3 year and 5 year returns pattern as well as the prevailing market conditions.

15. Do your investments in mutual funds and equities through the systematic investment plans to know the power of compounding.

16. Always invest in assets (those which give returns far greater than the rate of inflation)

17. Do not invest in liabilities (those in which the rate of return on investment is far less than the prevailing inflation)

18. Plan and have a contingency fund to meet the unforeseen events in your life.

19. We need to understand that parking an amount in liquid fund is better than having it in a savings bank account.

20. Investments in NCDs and bonds are likely to fetch better returns than fixed deposits in banks.

21. Have long term, medium term and short term financial goals in your life. Plan your investments early in accordance to meet the finances for achieving your long term, medium and short term goals.

22. Such goals drives you towards monthly financial budgeting, curtailment of unnecessary expenditure, choosing worthy investment options to save your tax, ensure social security and to meet investments for achieving your financial goals.

23. The best interest always comes from your education and learning.

24. Remember, you can extend your happiness by reading and applying the above 23 magical points.