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Money worries have been a part and parcel of life ever before we shifted from the barter system to the more convenient currency system. It’s especially for young adults, who are relatively new to managing money as they begin their careers. Unfortunately, this often results in stress, anxiety and an overall discomfort we’d rather not deal with. This week, as we celebrate International Happiness Day, let’s tackle a persistent source of our happiness problems – money management.

Experience plays a major role in managing money, but most regret not knowing the basic mantras of savings earlier in their lives. The earlier you start implementing some basic, but effective steps in your money routine, the more money you will have effectively “earned”, and could be put to use, thanks to the simple concept of compound interest (more on this later). Keep an open mind, and dive in!

The 50-30-20 Rule

If you have researched managing money before, you may have already come across the “50-30-20” mantra. For the uninitiated, it goes like this:

• Spend 50% of your salary on necessities and essentials, 
• 30% on luxuries and at your discretion. 
• Aim to save the remaining 20%. 

If you have debts, it is important to pay these off with 20% before you start saving. Aim to pay off your debts as soon as possible, by trying to increase the 20% as much as possible, by cutting down on the luxuries. Once debts are paid off, it is important to invest this money, so they earn you some return while being available for usage when needed. Keep in mind that 30% is the maximum recommended limit for luxuries, and 20% is the minimum for savings.

Buffer Money

It is absolutely essential to keep some readily available money worth 2 months’ salary (4 months’ necessities) as an emergency stash fund. We would recommend a high-interest savings account, with minimal annual charges for this purpose. Make sure this is distinct from your salary account to assist in deterring your impulse to spend this money. When creating this buffer, try to spend only on your basic needs and live like you are broke. All the money that you save during this period should go toward creating this buffer.

Make Use Of Instant Loans

Despite our best efforts, we can still run into a cash crunch every once in a while. Or we may just want to reward ourselves and splurge on the odd occasion, without having all the cash we need. This is where it’s important to be prudent with debts, by making use of instant loans, offered at a low-interest rate, from new-age fintech platforms. With options like Fibe, you can avail instant loans from right within your smartphone in an entirely paperless fashion, at interest rates as low as Rs 9/day. Of course, aim to pay it off as soon as possible, since EarlySalary doesn’t levy prepayment charges as well.

Budget

Track every single penny that you spend. This is perhaps the single most basic task for managing money worries. Budgets not only help track down unnecessary expenses, but they also help you identify where you should rather be spending your funds on. This elementary step, which should cost you 10 minutes of your time to set up, has the potential to generate significant savings. The impulse to spend money may be largely reduced once you form the habit of making budgets and sticking to them.

Invest and Reinvest

Read the following statement out loud, and memorize it. “Invest long term. Invest regularly and religiously. Reinvest the returns”. Now that you have memorized this, practice this. 

• Any safe investment, like index funds, mutual funds or bonds, performs admirably well in the long run. 
• Post-retirement, or whenever you might want to harvest on this tree, time your exit based on the market trends to reap maximum rewards. 
• Conduct proper research, as each investment carries its own risks. Diversify your investments over a variety of different funds, schemes, bonds to minimize your exposure.

Regular investment and reinvesting your returns are extremely beneficial because of the power of compounding. Assuming an average of even 7% per annum return (compounded monthly), just INR 1,000 invested every month for 20 years along with the returns (total investment of INR 2,40,00), will accumulate to be INR 523,000. On the other hand, if the initial INR 1000 rupee investment is delayed even by 2 years, it will end up a grand total of INR 4,23,000. You do the math.

These are, of course, some basic tips on managing your finances. As you deploy them for yourself, you will not only witness noticeably improved results on your financial well being but also evolve some financial strategies unique to your situation and goals. We’ve already covered planning taxes, making use of credit, etc. and more on our finance-focused blog. Feel free to check them out! 

With the recent controversies surrounding Yes Bank, and the Government of India stepping in and placing the bank under the moratorium, many of us are understandably wondering if our banks are indeed safe. The depositors of Yes Bank have been subjected to a maximum withdrawal limit of INR 50,000 (till 6th of April 2020). This is largely due to the problems stemming from its NPAs (Non-Performing Assets), with the government intervening to ensure the safety of the public’s money and to ensure that Yes Bank resurfaces from this crisis. In a separate post, we recently discussed the state of our credit sector as our republic turned 71. 

To answer the question in everyone’s mind though – “Is my money at XYZ bank safe?”
YES (no pun intended), it is. 
Here’s why.

Guaranteed by DICGC (Deposit Insurance and Credit Guarantee Corporation)

Your money (up to INR 1,00,000) in the form of savings or deposits in any form has always been completely safe and guaranteed by the Deposit Insurance and Credit Guarantee Corporation (DICGC). Irrespective of a bank being commercial or cooperative, as of today, any amount due to you, from a bank that goes under, in the form of savings or deposits will be repaid to you by DICGC, a subsidiary of RBI. This amount is set to increase to INR 5 Lakhs, effective from the 1st of April, as per the announcement of Ms. Nirmala Sitaraman, finance minister, in her Union Budget 2020 speech. This should cover the majority of savings an individual typically stores in a bank. 

Subject to Government and RBI Regulations

Every bank in India is monitored by the RBI and the government. Many checks and balances have been placed in the system to prevent such circumstances. Reserves, provisions, etc. have to be maintained by the banks at rates dictated by the government. Additionally, the finances of the banks are audited by an independent auditor, helping everyone get a true and fair view of what’s going on inside the bank, giving the customers enough time to shift banks, if necessary. RBI and the government intervene in case a bank is in a crisis, as exhibited in this case. The rehabilitation process of this bank is underway, with the changes in the board as mandated by the RBI, and infusion of fresh capital from State Bank of India. Necessary efforts will be taken by all the parties involved to ensure that the public’s money will remain as safe as possible.

However, it is important for us to understand that banking, like any investment or business, carries its own risks. The onus is upon us, the customers of the bank, to understand the risks involved, and manage our risks accordingly. Many safety nets are provided by the government, but this does not mean that we are to entrust any institution without doing proper research. However, it is easy to manage our risks, if we follow a few basic steps.

Diversify your Savings

We’ve often heard about diversifying our investments in order to hedge our risks, but what about our savings? Savings are also investments. They earn you interest, albeit a low rate of interest, but that is the price you pay for liquidity and lower magnitude of risk. Though banks are usually seen as a risk-free place to deposit, the possibility of a bank going bankrupt is still something to keep in mind. The smart strategy for any individual is to diversify the savings in different banks, as this will help ensure that they won’t feel the pinch during times like this present Yes Bank crisis.

High Interest = High Risk

Several small banks offer 1 to 2% higher interest than the usual deposit rates. This is usually an indicator that the bank offering such interest for savings also carries along with a relatively higher risk. Savings are usually maintained for its liquidity and safety, so going for relatively more stable banks, and not for that additional 1 or 2% per annum, should be the way to go.

Pay Attention

More often than not, if a bank is about to go under, the indicators of such a downfall will be available for a significant amount of time before a crisis happens. The financials will often begin to show signs much before the crisis balloons. Paying attention to a bank’s NPAs and losses in the financial statements, the factors behind such developments, the news, etc. are often good resources to help understand the stability of your bank.

No money is risk-free. It is essential for us, as customers, to understand this simple mantra and manage our holdings appropriately. However, during times like this, where there is a maximum limit of how much we can withdraw and use, we can always make use of low-interest instant loans offered by online instant loan platforms like EarlySalary. With loans available at interest rates as low as INR 9 per day, and a pioneering record of a million loans disbursed so far, no restrictions on bank withdrawals should be too big to deal with!

As we celebrate Holi, the festival of colors and joy, we at EarlySalary want to ensure your finances remain colorful too! Some basic practices, which when applied and practiced regularly, can go a long way in ensuring you don’t fuss about your future and your retired life, even if you’re living on a modest pay right now. We’re here with some fairly essential tips to help plan your finances and by extension, your life. Let us know what you think!

Invest For Your Future

For young adults fresh into their careers, managing finances can seem like a challenging task. Many may even find the idea of retirement planning preposterous and majorly premature, as they are already overwhelmed with managing finances for the present. While this seems like a reasonable reaction, it almost always culminates in the late realization that they haven’t saved up enough for their future, a little too late in their lives. 

Without having begun their investment journey, they stand to lose significant amounts of money that they could have generated outside of their professional work. In this blog post on International Happiness Day, we had shared why investing as soon as possible earns you a lot more money for investing the same principal.

SIP – The Key To Your Long Term Dreams

Mutual funds investments, coupled with SIPs (Systematic Investment Plans) are arguably the most efficient way to work towards your next big spend. Whether it’s your dream house or that long-awaited trip to Paris, a SIP not only helps allocate periodic savings, it also helps grow the quantum of your corpus. Consulting with a financial planner, or a mutual funds agent, saves you (and makes you) a lot of money in the long run, helping you achieve your long term goals.

Plan Your Taxes

Earning beyond Rs. 2.5 lakhs annually attracts Income Tax in India. While taxpayers have learned to make use of the legal deductions to reduce their tax liability as much as possible, they often leave their tax-saving spends until late February. Unsurprisingly, many have to live through February and March like they’re broke. This happens primarily because they haven’t planned for their taxes in advance, throughout the year. Spending INR 1.5 lakhs (the maximum deductible limit under Section 80C) throughout a year, is certainly more convenient than spending INR 1.5 Lakhs over two months. Check out our dedicated post on tax savings tips for an in-depth look at maximizing your tax advantage.

Utilise Credit Wisely

Credit is the best example of a double-edged sword. When utilized properly and effectively, is the best tool under your belt for your money problems. A financial crunch happens to everyone, stemming from temporary cash-flow problems or employment situations, or whatever else as a reason. It’s important, however, to make sure you’re on the right side of loans:

• Credit can make your life a lot easier, but only if you ensure you pay off your dues on schedule. Always borrow from reputed financial sources, like banks or even online fintech apps like EarlySalary, that offer loans at rates as low as
  Rs 9/day. 
• Do your research, and borrow based only on your needs. Aim to pay the debt off as soon as possible, so that you don’t pay unnecessary interest. 
• Make use of flexible EMI options and avoid lenders that charge prepayment fees.

Spend Some Finance Time

Perhaps the most underrated tip that’s often given little attention. It’s critical that you deliberately resolve to spend some time to plan out your finances, and don’t just do it when you have free time outside of your other responsibilities. While a large part of our waking hours are spent in generating (and spending) our income, we often disregard the ‘managing income’ bit. 

Of course, it is not practical to compare our financial abilities to trained professionals, but it is certainly possible to get better at finances by spending some time and doing the legwork. Before you get intimidated by the idea of committing a large amount of time for this project, know that this can be achieved simply by inculcating the habit of spending some time towards budget making, researching, managing your portfolio, etc. 

These are just some of the many tips that we have shared in our blog over a period of time on finance management. Do check out our finance blog for an in-depth understanding of personal finance and how you can leverage it to your advantage.

Happy Holi!

An economically strong and independent woman, like any other individual, can contribute significantly to any household, state or nation financially and socially. The issues concerning equality of sexes isn’t a festive phenomenon, but a raging topic that needs to be highlighted as a matter of prime focus when it comes to issues such as GDP, parity index, and overall growth of the economy. As per research, women in India contribute 9.8 times the amount of labor in the unpaid sector, which is measured and valued could contribute 0.3 trillion dollars to India’s economy (the genie is out with a solution for the 5 trillion economy dream!). 

International Women’s Day is around and heated debates about women empowerment and equal rights have once again come to the fore, bringing out crude insights into the state of affairs in India. The second sex not only suffers socially and culturally but also suffers differentiation in terms of the pay gap and workforce participation. This women’s special week, let’s address 5 critical questions revolving around issues concerning the gender pay gap and gender parity in the workforce: 

India’s position on the world map

India ranks in the bottom 10 countries of the world when it comes to financial independence and economic opportunities for women. A WEF report posits:

• India ranked 108th out of the 149 countries in terms of economic participation. 
• In terms of wage equality for similar work, it held the 72nd position
• And, 142nd position with respect to economic opportunity and participation subindex. 

These startling stats reveal the dismal situation that women have to face in India each day. The figures substantiate the cultural, social and familial constraints Indian women have to face. Women comprise 48% of the total population and represent only 1/4th of the total workforce.  It is notable to look at the confronting wage equality and economic opportunity figures. The reason lies in the difference in how we measure the gender pay gap and the unequal pay.   

Gender Pay Gap

The Gender pay gap refers to the difference in earnings between women and men in the paid employment and labor market. As per a recent Monster Salary Index report, women in India earn 19% less than their male counterparts with men earning INR 242.49 and women earning a lower INR 196.3. The stats show a marginal decrease of 1% over the previous year pointing to the snail pace of change and negligent attitude towards gender parity issues by corporate India.

“The narrowing of the gender pay gap by just one percent is not just a cause for concern, but a reminder to genuinely introspect if we are doing enough.” – Abhijeet Mukherjee, chief executive officer, Monster.com, APAC & Gulf.

 The Index further segregated the stats as follows:

• The pay gap ceases to exist in the unskilled sector and widens with a higher skill level.
• It is 20%  for women employed as the skilled labor force. 
• The gap rises to a staggering 30% for highly skilled jobs. 
• The gap widens further with an increase in experience and amounts to a 15%  difference favoring men for jobs requiring 10 or more years of experience. 

Discrimination at Work

The Gender pay gap substantiates further as discrimination in the workplace. Another annual survey titled ‘Women of India Inc‘ came up with some key findings indicating how these gender gaps flowed to other areas in a woman’s professional life. 

• 60% of women felt discrimination at work.
• About one-third of the women surveyed felt that women weren’t easily considered for top management roles. 
• Of the total men and women surveyed, 71% of the men and 66% of the women insisted on gender equality in workplaces. 

The differences in pay are prevalent at different magnitudes across sectors: 

• IT/ITES services at 24%
• Healthcare and Social Work at 21%
• Manufacturing at 24%
• Only Banking and Financial services showed the pay gap inequality at 2%. 

Barriers hindering equal participation

Indian cultural construct places man at the apex of the hierarchy. Women are often required to request permission for their career choices from the male head of the family and often sacrifice their dreams to enact the childbearing responsibility. There are several notable barriers: 

• A little closer look into the stats clearly reveal the lack of financial independence and credit facilities available to women entrepreneurs who want to make it big.
• There is a dearth in opportunities available to girls when it comes to education and career. 
• Property norms further mar the growth prospects in the Indian case. 
• 86% of the women cite safety as the foremost factor affecting their career choices, 51% considering night shifts as an unsuitable option. 
• Male workers often become uneasy with female bosses owing to the patriarchal mindset. 
• No proper provisions are there for maternity leave and motherhood. 

Men, in traditional Indian society, are the breadwinners and women housekeepers and caretakers of the family. An average woman spends about two-thirds of her time on unpaid work while a man spends one-fourth his time in stark contrast. Breaking such gender stereotypes, women are attempting to live their dreams. Marriages often lead to compromises on part of the women and childbearing role of women gains prominence. Women often settle for low paying jobs to meet their familial responsibilities. 

Legislative protections

The Equal Remuneration Act of 1976 posits the right to equal remuneration to men and women to prevent discrimination on the basis of gender. This act saves women from discrimination to some extent in the formal sectors but the majority of the women are employed as labors and workers in the informal sector such as agriculture and construction. 

India has been a permanent member of the ILO governing body since 1922 which requires states to direct their national laws and policies towards guaranteeing equal Remuneration to all workers, regardless of gender. 
Even the constitution through Article 39 envisages the right to equal pay for equal work for both men and women. But on actual grounds, the reality is far from equality. The parliament is yet to pass the 33% reservation bill for women in the Lok Sabha.  

Organizations and firms across India are integrating provisions to provide level grounds for the interplay of sexes in the workforce. Gender Parity in the workspace and minding the pay gaps can ensure long term sustainable growth for an organization and economic development of an economy. Financial inclusion and equal opportunities in work and education can tap the skills and potential of the female workforce resounding in social upliftment of the society as a whole.
We, at EarlySalary, make it a point to provide every individual, irrespective of their gender and financial status, easy borrowing options at low rates of interest. Our salary advances and affordable loans can prove a sound step towards achieving parity in credit and sorting financial worries with the least minimum hassles. 

Work culture in organizations is gradually moving towards diversification and inclusion. The current times are witnessing gender stereotypes bring identified and shattered in the wake of gender sensitization and diversity. Organizations across the globe are making concerted efforts towards the goal of equality of opportunity. Still, equality at workplaces is a far fetched dream. Take for instance the case of the US, where: 

• 50% of the workforce is females, and
• 60% of the advanced degrees are earned by women. 

Yet they earn lower salaries and fill up fewer seats in male-dominated professions like technology and finance. Fortunately, these stereotypes – those of women typically avoiding math, science and often all things logic – are on the verge of shattering.

A study conducted by the global research organization Catalyst stated that among Fortune 500 companies, the companies which had the highest number of women directors on board have shown better financial results and those having at least three women on their board have stronger-than-average results.

Gender Stereotyping deeply impacts the psyche and confidence of the female workforce. As per research, by the age of 6 years stereotypes regarding intellectual ability take root in girls. Girls identify themselves less with STEM subjects (Science, Technology, Engineering, and Mathematics). At the workplace, women find a less conducive environment to hold leadership and skill-based jobs, share their ideas in discussions concerning these subjects. 

Indian Scenario: Tech

The current Indian scene has begun a positive, and hopefully soon – pretty picture: 

• Women representation in corporate jobs has increased from 21% to 30% in a span of five years, as posted in  Zinnov-Intel Gender Diversity Study 2019. 
• Females are represented higher in non-technical roles at 31%, while in technical roles their share is 26%. 
• Only 11% of the C-suite positions are held by the women, they were represented at  20% in mid-roles and 38% in junior roles. 

If these stats are compared with the global figures, Indians are surely taking strides in leaps and bounds to cut across cultural misfits and gender Stereotyping issues. As per a NASSCOM study of IT professionals and middle management from companies of Europe and India, 35% of the people with specialist technology roles are women in India as compared to a mere 17% female representation in Europe. 

Several organizations like Oxfam India through its campaign Bano Nayi Soch are all in for progressive ideas that subvert the norms of patriarchy.   

In 2016, Facebook initiated recruitment practices focused on bringing in black and female workers into their workforce – in who now make up 36% of its workforce. Sheryl Sandberg, COO of Facebook and the only woman on their board posits the concept of ‘leaning in’ in her recent book as the idea of being ambitious in any pursuit.  

Kiran Mazumdar Shaw, the CEO of Biocon and the first woman billionaire entrepreneur, reiterates that there is no dearth of talent in meritorious women and even though a small minority, they are well respected and worthy of inclusion. 

Indian scene: Finance

Women are considered excellent investors, but female representation in the finance sector remains meager. A CFA Institute Gender in Investment Management study shows a mere 11% representation of women investment professionals in the industry.  Research across the globe has proved how a culturally rich and diverse workforce delivers optimum results and lower risks for investors. Experts cite several pros of getting the women included in the workforce. 

• Firstly, female inclusion will tend to bring in newer perspectives into the industry that can usher in a new revolution in the industry. Quality of output and decisions will definitely see improvements. 
• Gender diversity can lead to innovations and rethinking of the old investment strategies that are sure to impact investment outcomes. 

Several initiatives have been taken to improve the involvement of the females at all levels. For instance, Young Women in Investment, India’s first initiative seeks to create female awareness and interest in the investment management industry. The initiative focuses on presenting investment as a long term viable career option to the women. The success and support of this initiative have definitely paved the way for the inclusion of females in the future of finance. 

Initiatives to Break Stereotypes

While we’re doing well, there can be several initiatives that can make the future of tech and finance into a substantial female-centric arena: 

• Tech can be leveraged to advance gender parity and women empowerment in a number of ways. The development of the gig economy is offering a contingent workforce that is sure to lessen such gaps in the future. 
• Unlearning the biases in our mindset and doing away with gender stereotypes will be a daunting task that would demand our attention towards sustainable and all-inclusive economic growth. 
• A survey conducted by Unilever showed that 77% of men and 55% of women felt that men are best suited for high-stake projects. Such views deeply impact gender parity issues. Marketers and media need to stop the sexist portrayal of women. 
• Social, political and cultural fronts should take it upon themselves to curb these formative practices of stereotyping and expose both the genders to all kinds of non-traditional fields like tech or finance to let them make their decisions rationally. 
• There is a dire need to bridge the skill gap among women by taking advantage of digitization and tech innovations. The global “talent shortage” is currently at 38%, with the top ten hardest jobs to fill in STEM professions. The focus has to shift to building competencies and skillsets among women. 
• Another key area of concern is the online representation of women. There are 250 million fewer females present online as compared to males. Connecting and bringing greater access to regions with no internet can bring about unforeseen opportunities and can even act as catalysts synthesizing women’s inclusion in tech and finance. 

The instilling of the right temperament among the youth holds prime importance as the majority of them make their career choices by the age of 26 as per a survey. Women do not lack in tech or finance skills and knowledge, what they lack is the proper nurturing environment enabling them to fulfill their dreams sans any bias or stereotyping. Once the institutions of today get in sync with gender equality and diversity themes, the potential and opportunities awaiting women in tech and finance can be attained.
And we can surely hope for a feminine era in finance and technology awaiting us in the near future. 

“You are fierce, bold and daring! Also, the best when it comes to caring.”
Happy Women’s Day!

Every 1st March, the world celebrates “the right of everyone to live a full and productive life”, in the form of Zero Discrimination Day. While we’ve made significant progress on this front with each passing year, perhaps we should pay attention to an aspect closer to our hearts as a brand – credit access. Financial discrimination is a reality, after all. Fortunately, with sensitivity at the forefront in this age, there is considerable awareness being spread to combat it. This is now leading to better opportunities in the financial sector, including loans.

The loan market in India is rising. Take the period February 2017 to exactly a year later, when there has been a sharp increase in the number and assets under personal loans, recording a growth of 20.4%. The number of personal loans and credit card debt recorded for around the same period was almost double the amount of FDI in the country. If we go even further back, for the period of 2014-2018, the compounded annual growth rate of the same has increased four times. 

But this doesn’t always convert to good overall growth. Despite the rise in the amount of credit doled out, there remains a disparity between the total number of applicants and those that are approved for loans. The rift goes deeper than portrayed. Borrowers are not rejected just out of necessity to protect the banking system, and not every rejected application is at a considerable risk of not repaying the loan. Sometimes there is the simple issue of discrimination at the root of this.

What Discrimination Do Borrowers Of India Face?

Studies show that there could be a number of modes of bias. It could be on the basis of prejudice, inaccurate stereotypes, and incentivization. For example:

• Banks have been known to have a low acceptance rate based on the location of the borrower.
• In other cases, banks may often reject cases based on the nature of the business a borrower may be running.
• In some rather unfortunate cases, human bias – such as an agent’s perception of a borrower – from mannerisms to even names, could be the cause of a loan application to be rejected.

Banks, at the end of the day, are capitalist organizations. This means that the decisions they take are based on the impact they’d have on the bank’s bottom line. If a bank has seen historical trends indicating higher loan defaults than average from a particular area or for loans to a certain business, higher rejection rates simply become a matter of policy over time. And when there’s human involvement involved, discriminating on a borrower’s characteristics may not be, strictly speaking, legal. But the human bias may manifest itself in other ways – leading to a more thorough underwriting procedure than normal, with a higher probability of locating red flags as compared to other borrowers – ultimately becoming grounds for rejection.

As a borrower, if you have any grievance related to discrimination, you will probably have to go the legal route. It is a lengthy and tiring process, and for many, this is not an option. They prefer to whine about it and get on with their lives.

Banks are heavily regulated by the RBI and government when it comes to lending. However, a bank, in theory, is a business and it is up to them to accept a loan application or not. While the regulations in place work to prevent misuse of power and ensure the sustainability of banks to some extent, whether they create a free and fair mechanism for the public to gain loans is a matter for discussion. To clarify, there are no fundamental flaws in the lending system in India, but there are issues. Personal bias or discrimination on the basis of status or profession plays a part in deciding whether your loan will be approved, is, unfortunately, a reality.

Take home loans, for example. If a lender is not convinced by you or does not like your predicament for any reason, you are likely to get rejected. The reason for this, again, is the regulations in place and the need to recover debts. This is dependent on the business model of a bank, which requires constant cash flows, mainly so that it can honor withdrawals. Not being able to do so reflects very badly on the bank. This is often a reason, and sometimes even an excuse, to reject applications. And nothing can be done about it because it is their legal right to do so.

Having said that, sanctioning loans is the primary source of income for banks. They would not intentionally try to get your loan rejected. But unexpected policy-related and unconscious discrimination can often play a part in this process. 

How Fintech Platforms Are Coming To The Rescue

To that end, fintech portals like EarlySalary are superior alternatives, as they don’t subject themselves to restrictions as stringent as those for the banks. They are conceived out of the shortfalls of the current lending system and work to fix holes in it (and of course, succeed as a business).

Talking about lending platforms, every lender might have a different working mechanism:

• They are free to create whichever lending structure they want however they see fit, provided the intention is not to defraud others. 
• This gives them a competitive advantage as they can use advanced techniques to create a more efficient system to compute a potential customer’s ability to repay before creating the mode of repayment. 

For some lenders, this is a rigid system with set steps. For others, it is flexible. What is understandable here is that they provide many advantages as compared to banks. 

• For one, there is a lack of complex paperwork and wastage of time. 
• Since most underwriting and approval processes are information and computer-based, there is little scope for bias. In fact, there is very little contact between you and the agent, as most of the requirements are taken care of when opening an account with the lender, which again is usually quite simple. 
• The focus of lenders is to make the process simple, and they handle everything else for you. 
• A few things don’t change – should you provide false data, your application will be rejected. The verification process is strict in nature because they don’t want to be scammed.

Things are not looking too bad in the fintech sector, with the inaugural Fintech Adoption Rate in India in 2017 found to be 52%, compared with the global average of 33%. It then grew to an amazing 87% in 2019. This is fairly healthy for an industry that has truly taken off in the last three years. The market size a year prior to that was estimated to be around $8 billion and a growth of 1.7x is predicted by 2020. This is not all – the Compounded Annual Growth Rate over five yours is estimated to be 22%. A major contribution to this is the rise of digital payments and mobile wallets in recent years. This is set to be a contributing factor in raising awareness over digital transactions which could possibly lead to further growth in the fintech sector.

With the demand of loans increasing due to awareness over the falling value of money, there is an ever-increasing need to ensure that the lending system is not biased.

A large number of players in the market are working towards this, having a goal of a discrimination-free lending system. With every small step, they reach closer.

When it comes to your finances, learning how to save money from income tax is a skill that one should develop. Tax planning is essential and fairly easy once you arm yourself with a few tried-and-tested tax-saving strategies. In fact, when done right, you can save a significant amount of your income. 

Here are a couple of tax-saving tips to help you streamline all your tax payments:

#1 Keep an eye on your savings account

This is one of the easiest ways to save income tax. While the interest generated on a savings bank account is recognised as income, you must know that the first deposit of up to ₹10,000 is exempt from any tax.

#2 Use tax-saving mutual funds

When learning how to save maximum income tax, be sure to consider your investing portfolio. Tax-saving schemes like the Public Provident Fund, National Savings Certificate, Equity-Linked Saving Schemes and others can be quite handy for such uses. 

Thanks to these schemes, you can reduce your taxable income by claiming deductions up to ₹1.50 lacs every year, as per Section 80C of the Income Tax Act. In a bid to learn how to save on tax, be sure to consider the other side of this coin. Investing your money for the sole purpose of reducing your tax outgo isn’t ideal. Your actions should contribute to your financial objectives, so invest wisely.

#3 Avail income tax deduction for rent

A salaried professional living in rented accommodation can enjoy the benefits of deduction claims like the HRA exemption. However, in case it is not applicable, you can claim deductions on the rent with the help of Section 80GG of the Income Tax Act. 

Such deductions are crucial income tax-saving tips when planning your finances. To save income tax, tips like these come in handy and you should learn about them. In addition to availing this deduction, you can speak with your employer and ensure that your salary structure is accurately aligned with your needs. In this instance, you must ensure that you get the HRA component of your income, as you would need this for tax-saving purposes. Similarly, if there are other viable components that could qualify for deductions, ensure that your employer includes them in your salary structure.

#4 Borrow loans smartly

When you take a loan for personal reasons from friends, relatives, or other informal sources, you have to pay taxes. This is because the principal amount in such cases is considered income, and you have to add it to your tax math at the end of the year. An alternative to this is to borrow loans from banks and NBFCs or even online from an instant loan app. 

While these personal loans aren’t great tax-saving instruments, you can avail benefits on the interest you pay. However, you can earn deductions on the interest you pay out in some specific cases only, such as:

• Taking a personal loan for business
• Funding your education using a personal loan 
• Availing a personal loan for constructing or buying a residential property

#5 Don’t wait for February

An important part of learning how to save on tax is to understand that it isn’t a last-minute effort. Be aware that tax planning and optimisation is a continual process. It requires a keen eye for detail throughout the year. Taking quick decisions on taxes as February concludes can result in errors and confusion, such as:

• Choosing the wrong tax-saving product in a hurry
• Being unprepared for a large money outflow for your investment option
• Being financially unprepared for a large tax outflow itself

As any wise investor agrees, you have to pick investment options according to priorities and risk tolerance apart from tax optimisation factors. This can reduce your last-minute stress and help you learn how to save on tax more efficiently for the next year. 

Moreover, by not delaying this process, you avoid penalties that are applicable for missing out on the deadline. This is a common issue and many miss out on the last date to file taxes. Waiting until the end of the financial year is never a smart option, especially if your goal is to reduce your tax outgo.

Ideally, this process should get initiated at the start of the year and action your tax-saving strategies right from the start. You can hire financial experts to assist with the planning process and ensure that you have the right instruments for maximum savings. In fact, availing the services of a professional may be the right way to go about it.

#6 Get insured and insure your loved ones

One of the efficient ways to save income tax and save money in general is to purchase health insurance. Having an active insurance policy has many benefits, and one among these is that you get deductions on your premium payments, as per the IT Act. 

If you are paying the premiums for health insurance plans for yourself and your dependents – your spouse, and your children, you can claim up ₹25,000 as a deduction. Additionally, premiums for health insurance for your senior-citizen parents qualify for a deduction of up to ₹50,000. 

While the tax POV is one way to maximise your savings, health insurance in general is also a smart option when prioritising savings. This is because it acts like a financial safety net when you need medical care or are faced with a medical emergency. With comprehensive insurance, you can get coverage going up to lacs of rupees, and this eliminates the need for you to depend on your savings.

The Verdict

Now that you know how to save on tax, it is important to remember that not all tax-saving options are the same. Pick strategies, opportunities, and even investment vehicles that best suit your needs. Security, cash flow, and returns are some factors to keep in perspective. After all, your objective shouldn’t be just about tax saving but to smartly leverage the opportunity to help you accomplish your financial goals.