Education Loans

Graduate Piggy Bank

Quality and Quantity seem to come hand in hand. In present scenario, quality education burns a hole in the pockets of parents because of the huge quantity of fees charged for it.
Education loans offered by numerous financial institutions are a boon to the vast sea of students. Students can breathe a sigh of relief with the numerous loan options served across to them, choosing their careers is easier now.
Parents also can be complacent about the fact that they have a monetary pillar to recline on. However there are some factors that we need to be vigilant about.

  • 1. Your educational institution is looked at with a microscope before a loan can be granted. The colleges that offer good placement opportunities are given a green signal. The educational institutions that are not well recognized are given low priority for giving out loans.
  • 2. The CIBIL score for both parents and students is one of the key factors that leads to an approval or disapproval of the education loan. The credit history needs to be up to the mark, and there should be no traces of regular defaults. This holds integral for students, who have just entered college and also have started working. These youngsters might apply for various credit cards with a low repayment capacity resulting into a disrupted CIBIL score. For the parents who are the guarantors, it is imperative to have a good credit score.They are the ones who guarantee the repayment of the loan.
  • 3. Your academic performance also one of the deciding factors for the lenders to grant you a loan. So if you do not fit in the eligibility criteria that the financial institution possesses, then your loan request might be rejected. The banks/financial institution thinks that you would fall in the category of a non-performer and not earn enough to repay.
  • 4. The type of course that you have applied for ascertains the loan approval. If the loan is for a part-time course, then chances are that the bank might reject your loan application. Financial institutions/banks approve loans that are meant for a full-time course abroad or in the same country.
  • 5. The income of your parents is a crucial factor that can turn the tables. Since your parents essay the role of guarantors, and if you fail to repay the loan, then it is on them to repay the amount. If it is fairly low, then the lending institution will not hesitate to disapprove your loan request.
  • 6. Financial institutions do not rely on “Age No bar”. There is a certain age limit upto which loans can be approved and that is 30 years.
  • 7. Whenever you take a loan of more than 7.5 lakhs, then it is necessary to have a collateral and joint borrower in place. If you are unable to provide these, then you might get the loan disapproved. Having a collateral in place, gives a sense of guarantee to the lending elements. They feel that they can recover the amount loaned in case of failed repayment. For an amount lesser than 4 lakhs, you are not required to have a collateral in place. However even such an amount necessitates the involvement of a guardian/parent.
Taking loans for education that is a step taken in many people’s lives. Hence we wanted you to be aware of the obstacles that might come in future planning and career decisioning. Being cautious will help you in better financial planning and control of money.
Image Source:Student Loan Helper

Common Money Management Mistakes Fresher’s Commit in their Early Years

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While you are young, you do not really realize the role that money plays in your life in latter stages. So it becomes imperative to realize that there is a balance in money management that we need to attain.

Just entering into the shoes of an employee makes you see the world with a different view altogether. You have a different take on everything. Stepping out of your comfort zone to a ground of exposure makes you cringe with anxiety at times. Because financial responsibility now is yours to take care of.

We want to list down some basic yet important thumb rules that you should follow at early stages to plan better in finances.

  • 1. Keep a check on your purchases: Money is yours. Direct your expenses and control your money. Do it either the offline or online way, but do it. Try your hands on excel sheet, or manage money with one of the money management apps. It makes life easier with lesser roadblocks. Be systematic, and assess the costs that spread across areas of essentials and non-essentials.
  • 2. Always build some emergency fund. It is imperative for us to have some financial aid, in case of an emergency. Try keeping aside a small portion of your savings for this section. Parting away from money is painful, but this money will be your friend in need during the unavoidable crisis
  • 3. Steer clear of debts: Debts do become our part of lives, at some point or the other. But it is necessary to keep a check on the debt pile. It should not accumulate enough to push us in the debt trap. Be wary of what you borrow. Borrow but repay on time. Don’t be habitual in using the credit card every now and then, if you cannot repay on time. This just builds pressure that is uncalled for.
  • 4. Shake hands with Tax management: Even though you are in your primitive years of earning, tax management is an art to master. The sooner you come to terms with it, the better it is for your later life. Evaluating the money that gets pumped in by tax machines, helps us to list better our expenses for duties , necessities and obligations.
  • 5. Resort to common sense and practicality: Be pragmatic about your needs and wants. For example wait for a while till the gadget in your wish list becomes cheaper instead of buying it right away. Opt for facilities that are free, instead of going out of the way to splurge on non-necessities. This does not imply that you need to compromise on your basic needs, but this just means that avoid extravagant expenditure. Especially the one that is easy to evade.
You have just embarked upon your professional journey, and we would want to wish you luck for all your endeavours. We want you to enjoy, learn and grow more to become financially able and stable. Happy Earning!
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Applying for a Home Loan

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Financial planning while taking a home causes us to hyperventilate without fail. This is an integral decision in our lives, where we are financially able to get a house of our own, but we dread the debt that follows to get one.
We need to involve ourselves in comprehensive financial planning, tackle debts and control our money efficiently.

We will discuss about few things that can help us in applying for a home loan without any hassle.

1. Firstly to get a home loan, we need to have a decent salary and a secured job. We should be regular with income tax payments and filing of the returns as well. We should also get our form 16 from our employer.

2. It is extremely crucial for us to have a good credit score. In the absence of a good credit score, the financial institution might reject our loan request.We should be prompt in paying our debt on the due date.

3. We need to also keep a check on any other loans that we have applied for and taken. Financial institutions monitor our capability to repay. For example, If we have taken many loans that occupy 50% or more of our salary, then we probably might not be in the state to repay the loans. Hence a balance is advisable.

4. We need to get a mortgage banker involved in the process of selection of loans. There are innumerable loan options provided by the lender, and we at our part have innumerable questions. Having a mortgage banker leads to us making decisions faster with efficacy.

5. As mentioned, financial institutions evaluate our repayment capabilities. the lending instruments will ask us for all the investment data that we have. We would be required to share the details of bank account/s, post office savings schemes, insurance plans, employment details etc. In case we are freelancers or self-employed, then we need to give the bank the details of our income, income tax return, balance sheets , so that they grant a loan.

6. It is very important for us to assess the kind of property that we choose to get a loan for. It may become a little difficult to get the loan sanctioned if the property is a resale property of age 10-15 years. The financial institutions also evaluate the construction stages of the property. The property needs to be dispute free as well. So it is wise to be safer by going for a property that falls under a good record and is on pre-approved list of the banks.

7. While applying for the home loan, we need to be ready with the down payment. Most of the banks give allowance for eighty five percent of your loan. We need to pay the remaining amount as down payment.

8. The repayment time also is an essential factor to contemplate upon. We can choose the time to repay our loan. But while deciding the time limit, we need to consider the fact that a longer period of repayment time will lead to lower EMI’s but higher rates of interest. We also need to consider our age too at the time of repayment. Will that be the right time and will we have the ability to repay at that age? So we need to make the choice accordingly.

9.The financial institutions do not press on the need to have a guarantor. However having a sense of guarantee ,leads to an increment in our credibility.
Also there are cases where in it becomes mandatory for us to have a guarantor. For example, if we are self-employed, or if we are on a transferable job, if our city of purchasing the property varies from the city where we reside etc.
The guarantor could be our friend or family. And he/she takes guarantee in the legal space. But there is criteria for the guarantor. There are age and income standards that are set by the financial institutions, and if they are not fulfilled then the person can not be a guarantor.
In case we become delinquent, and we are unable to pay back. Then it is our guarantor’s responsibility to repay the loan.

10. If we apply for a certain loan amount, and it is not getting sanctioned, then we can choose to apply for the loan with our spouse. The chances of getting approval increases.

11. Having an appraiser in place helps all the parties aware that you are paying a reasonable price. The financial institutions arrange for an appraiser who essays the role of a third party. The appraiser evaluates and gives an estimate of the value of the house that we intend on buying.

At the stage of closing the process, there is certain paperwork that we need to get done with. It takes a few days for the lender to fund your loan after the completion of paperwork.

Our intention was to draw your attention towards certain basic but crucial points that are required in the home loan process. Hope this article helped! Happy Buying! .

How to Repair your credit score?

Credit score

Before conversing about fixing damages to the credit score. Let us talk about a good credit score. We often ignore credit score while applying for loans, and many of us unaware of the low score, until the lender rejects our application and informs us.

We should not turn a deaf ear towards our credit score; instead we should monitor it regularly.

What is the Credit score and why is it so important?

So essentially a credit score represents a person’s creditworthiness when he/she asks for a loan. A person’s credit score is determined by the person’s repayment behavior and credit history, and the creditworthiness is constructed around that. The credit agencies maintain a database of credit standings of individuals and commercial entities. The score ranges between 300- 900. Score of 750 and above is considered to be a good score. There are four agencies that are permitted to maintain this database. They are CIBIL, Equifax, Experien, and CRIF highmark.

Why is the score so important?

With a huge array of financial institutions you might feel that money is easily accessible, but this is not the case. The risks associated with lending have always been considered high and it is necessary for the institution to ensure that it’s lending to right person. Hence, the financial instruments rely on criteria that decide whether you deserve the loan or not. Here is where Credit score shines brightly. It is usually the decision making point for lenders to give or to not give the loan to the borrower. Hence it is important for you to maintain a good credit score, and work towards improving if it is low.

What makes a good credit score.?

The credit score, amongst many things, looks at these critical parameters:-

  • 1. Repayment history
  • 2. Loan enquiries and status
  • 3. Loan to income ratio
  • 4. Length of the credit history
There are no short cuts to improving credit scores. The best way is to administer and manage it over time. And gradually things will fall in the right place.

Let’s focus on some things that we can do to better our low credit scores

  • 1. Stop asking for a new credit – If you are aware that your credit score is poor, you should not apply for a loan at multiple banks. The more inquiries the lender puts into your credit score, the lower it goes. You need to be patient till the time you obtain the suitable score.
  • 2. Lessen the debt quotient in your kitty – You should meticulously chart out the credit accounts that you have out of your credit report. You need to stop using credit cards for this situation. Make a budgetary plan, and direct your expenses towards the higher rate interest credit cards first.
  • 3. Keep your repayment balanced: Well it sounds quirky, however repayment does affect your CIBIL score badly. So in this scenario if you drastically pay off all your repayments at once, then this portrays instability in your financial records. Repayments as a process should take place gradually thus reflecting monetary stability and rendering positivity to your CIBIL score.
  • 4. Set up reminders for Payment: We are so caught up in our routines, that we hardly have a breathing space. But we need to be alert, and sensible when it comes to financial planning and decisioning. Some financial institutions offer payment reminders through their online banking portals that can send you an email or text message telling you about the due date. Also there are automatic payments through your credit cards, wherein if you enroll, then payments are automatically deducted from your account and gets received by the lenders.
  • 5. Be vigilant of any sort of mismatches in your credit reports: It is advisable to leave no stone unturned. Sometimes bank authorities can across erroneous entries to CIBIL. So in such case scenarios, you need to approach banks to rectify the mistakes. Also you need to make sure that all the data on positive and timely payments is recorded and submitted by your lender to CIBIL
  • 6. Use your credit judiciously: Whenever you make use of your credit, then you should analyze the credit utilization ratio. This ratio is of amount of credit you have used to the amount if credit available as balance. If you have numerous credit cards, and you use only one of them, then your credit score may get negatively impacted. Hence you need to be smarter and spread your spends over numerous credit cards and not just one.
  • 7. You need to create credit history if you do not have one: For first-timers, there is an absence of credit history. Lenders might hesitate to give them a loan, owing to their zero credit score. So what you can do is open up a fixed deposit and take a credit card against it. And once you have one in your hand, then you can work towards it and improve the credit score.

We recommend you to check the credit score before applying for any loan to ensure that there are no issues in the credit history. Even if there are any, make sure you get them rectified by the agencies before applying for the loan. Our aim for writing this out was to make you understand the importance of a good credit history, and we hope that you take smarter steps towards financial goals.

Image Source:Credit.com

Unsecured Versus Secured Loans

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One of the most common questions that we ask ourselves is “What kind of loan do I opt for?”
We take baby steps towards Loans. Loans are like those tricky questions in our exams, where we have to meditate hard to make the right choice.
Deciding upon which loans to take depends upon numerous parameters such as whether you want to take up a house or cater to your your child’s education or go on a vacation.

Taking loans is a financial commitment, and by agreeing for it, you are basically agreeing to pay a fixed part of your salary till your loan is repaid.
Loans can be majorly categorised into unsecured and secured loans. Sit back and read on further to know about these loans.

Secured Loans:- These loans are guarded by an asset or a collateral Through secured loans, you can get a huge sum of money. Putting your house or your car is a good enough security against the loan taken. Secured loans offer lower rates of interests, higher borrowing limits and longer repayment terms as compared to unsecured loans. The lender has the right to take you asset incase you become delinquent. Also if the selling price does not cover the debt, then the lender can pursue you to settle the difference in amount.

Some examples of Secured Loans are
1. Mortgage wherein your house is taken as security against your loan
2. Auto Loan: Here your vehicle is taken as security against your loan

The perks of Secured loans:-
Cost:- Secured loans are less expensive as compared to Unsecured loans.
Easy Accessibility – Secured loans can be obtained even if your credit score is bad. The lender can seize property incase of failure in repayment.
Tax deduction on interest:– The interest paid on the loans such as mortgage is tax deductible.

The downfalls:-
Losing your assets – You can lose a valuable asset, however the lender loses zero.

Unsecured Loans:- Here you do not have to give the right to your assets to the lender. Lenders are more prone to risks here.
When you apply for an unsecured loan, the loan gets sanctioned by the user on the basis of repayment capability. The borrower is judged on certain parameters such as credit history, capital, collateral , borrower’s current financial situation as well as prevalent economic factors) . His/her character is also taken into consideration to convert decisions to actions.

Some examples of Unsecured Loans are
1.Credit Cards
2.Personal Loans

The perks :-
Secured Assets – You do not lose assets, because the loan does not require a collateral backing them

The downfalls :-
Harder to get – Unsecured loans might be harder to get from the lender. You need to have a good credit rating, and if you do not have one, you might be considered risk worthy.
High Interest Rates – The interest rates may be higher.
Receiving the loan of Lesser value – Also you might not get the desired amount depending upon your credit scores. Hope we have helped you to get a better understanding of loans that exist.

Be smart and take smarter decisions!
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Money Management Apps

Money Management apps

Who doesn’t want a peaceful night’s sleep? But we do not always get what we want. We know for a fact that money matters, but money matters hound us in our sleep.

We have to essay the role of a smart money manager. Balanced budget is a must. But it is not as easy as it sounds. With our minds and finances in multiple places, it becomes formidable task to keep a track of money.

Going through uncountable paperwork and doing mathematics on the receipts is a cumbersome task. This leads to a haywire budget management, and we dread the day of budgeting.

The ultimate resolve to this is going digital. Technology has embedded deeply in our professional and personal life. And it is Technology that helps us solve most of the obstacles in our lives.

The tech masters have devised several apps that aid in budgetary planning, and taking smart financial decisions

We will list down some of the coolest money management apps that fix the financial fixes.
  • MTRAKR – This app helps in managing wealth and keeping a track on what we earn and what we spend. And as the name suggests, the tracking system here helps us to get rid of extensive paperwork. You don’t have to fret over having more than one bank account. This helps in managing multiple bank accounts. It is built beautifully, and has segregated categories of food, utilities etc. People with no finance background or zero bank knowledge can also tap this app with ease. It is fully automated and does not ask for any sort of bank passwords.
  • My Tax India – Calculating and saving tax, taking into account investments and other deductions is a complex task. Here is where My tax India becomes your saviour. It systematically calculates the amount of tax that you need to pay, and you can try out various settings to figure out the optimum level of investment that we need to make. It is user-friendly, and you do not need to be a maestro in finance to use it. So, at the time of tax filing you know what to expect, and you act accordingly. Otherwise you are left baffled with very less time to think through.
  • Wally – Wally is another expense tracker in the digital arena, it keeps a check on your expenses and keeps the spends stacked in categories. One very interesting feature is that it uses your location and categorises the venue, leaving you with very little work. All you need to do is fill in the expenses. Another feature is it’s ability to scan the receipts, relieving you of the stress to type in financial details . You get notified every time you reach a savings goal. Money Management is a much easier task now. We can direct our expenses accordingly.
  • Mint – So Mint basically integrates all your card and bank accounts while keeping an eye on your earnings, spends and savings. This gives in an in-depth analysis of your finances. This is one of the coolest Money Managers in the digital space.
  • Officetime – This is an intriguing application. It is for office goers for whom time is money. It helps you in analysing how productive your time is, and how you can use it more efficiently. This also helps you keep a track on your spends, and generates invoices for expense reimbursements.
  • Homebudget– As the name suggests this application apart from having a beautiful look and feel, creates a beautiful balance in the finances for your family members. It helps you to split bills with your spouse or family members by coordinating efficiently . It also helps working professionals to keep a tab on their multiple income sources.
  • Splitswise – You like going out, partying, or having dinner with your friends? Then this is the app apt for you. This is extremely useful in splitting the expenses. Splitswise, divides the cost systematically if there is a group with joint expenses and it gets tough to split expenses. This is a user-friendly app, and is very popular amongst youth.
  • Digilocker – This app is extremely handy to align and stack your financial documents Starting from your PAN card, Income Tax returns to other Bank documents, Digilocker manages all the confidential documents in an ordered fashion In short DigiLocker acts as the superhero in disguise.
So what are you waiting for? Tap the app that suits your needs.
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How to handle finances right after marriage?

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Youngsters before marriage find themselves perplexed when finances are being spoken of.

There is an absence of savings or a very much required emergency fund. Since their money management habits are haywire,it becomes essential that they get improved and systematic after marriage.

If the financial loopholes are not taken care of , then these become one of the biggest obstacles for both the individuals.

We would want to talk about some simple yet essential measures that can help you out during this phase of your life, Hence,we have jotted down some significant points of financial management after marriage. Have a look. Some ways to handle finances after marriage:-

  • 1. Plan for the uncertainties: – Even if you are stable in your careers and have a good salary, you both need to have a structured financial element in mind. Emergency won’t knock the door and come. Couples today are not really equipped to combat these emergencies, and are under constant stress. Unexpected illnesses, accidents, layoffs can cause a great deal of pain, and hence it is advisable to save a share of your salary over a period of time. This certainty helps to deal with the uncertainty in a much better way.
  • 2. Smart Spending and Smarter Investing : When you are married, you both need to be accountable for what you spend and invest. Spending is inevitable, as it is the simplest answer to both necessities and wants. You cannot blame the other person for the spending. The bottomline is both of you spend, but on different things, and hence there is a need to set a budget.It is required that both of you get on the same page, and focus clearly on the lines of investment. Be it Investing for next year or for retirement , investment planning is the need of the hour. There are many ways of investment for long and short run both. Seeking professional advise also helps.
  • 3. Set achievable financial goals: Having a foresight helps. Deviate from your monotonous life for once, and give considerable thoughts to life after 5 , 10 or 20 years. Anybody can earn money. But judicious usage of money is an art to learn. You just don’t want to walk on a path, there has to be set destinations. You should chart out your career dreams, lifelong goals, financial expectations together and set time to achieve and fulfil them. Summarising the important and less important ones and then prioritising them is the right course of action.
  • 4. Combining or Not combining accounts: So while planning finances, the question of having a joint account or a separate one arises.

    Both the options are working models. Let’s talk about them in detail.

    a)Separate accounts: – When you keep money totally separate, everything(rent, mortgages, necessities etc) has to be split . Also you need to evaluate what you spend, be careful of not spending too extravagantly, as the entire monetary responsibility shifts its weight towards your partner. Also, you need to plan to spend from each account to gain the tax benefits on Home loans, EMI, Investment Proof etc.

    b)Joint Account – In this case, you would put money in a single basket, and use it to pay off and spend. However this requires financial coordination and a mutual agreement on expenditures. You need to get to the common grounds of spending, because if there is a lot of deviation in spending patterns, then there is a lot of room for monetary imbalance and arguments.
  • 5. Checking Financial history – It is important for you to discuss financial history with your spouse and vice versa. Being aware of the financial history, such as the use and number of credit cards, credit scores, way of spending paints a clearer financial picture. So in case one of you has a poor credit score, then having a joint account becomes is not a smooth decision to make. So decision making is highly influenced by financial arrangement of both individuals.

    Managing Debts and Saving: It is good to combine accounts when the debts are cleared off in single or both accounts.

    Saving after the wedding is definitely a good idea, but saving before is essential too. We suggest you to open up a savings account before marriage for setting money goals beforehand and having a vision of future expenses. Both the individuals should invest a portion of their combined income after marriage, and let the account grow. I hope we have helped you in making better decisions. Happy Wedding !
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Wise Investment

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Investing your hard earned savings seems a difficult task , but in reality it is not. You you don’t have to be rich to start investing. The key principle is to Start small and start early.

If we focus on the right path to investment, then we would be amused to see the amount that we save in a very short time. It is mind-boggling to see everyone around me spending a considerable time before buying a mobile phone, car or even grocery. But when It comes to investment , the most significant decision of our lives(financially), we just go about it without giving much thought to it.

Hence we want to talk about how investment can be prioritised in the right fashion, and we have the following to explain just that.

7 pillars to build a wise long term investment portfolio:-

  • 1. Put up a road map together: and answer two significant questions: a) How long do want to remain invested for? b) What’s your risk appetite?
  • 2. Diversify your investments: The investors falling in the category of high risk takers, also plan investment by diversifying their portfolio. This is important not to invest everything into a single basket or instrument class.
  • 3. It is imperative to Plan for long term and avoid the temptation of short term gains.
  • 4. Never invest in something that you do not fully/partially understand. Research well to understand and then invest accordingly.
  • 5. Invest to save tax : You can save tax by investing under section 80 C. The maximum amount that can be invested is 1.50 lakh, and this means your income gets reduced by this investment amount. So you are exempted to pay tax on this amount. Also the invested amount increases in a period of time. So it is a win-win situation for you.
  • 6. Investment should be your first priority, and it should begin with the initial sum of money, and not with the leftover amount. Practicing this as a habit will help you clearly evaluate the difference, and you will be surprised to see the funds that are actually available for you to spend.
  • 7. Every Rupee costs: don’t let go off a single rupee. Do not fall fall pray to exotic schemes and keep your portfolio very simple. Try to look for the extra yield that many banks offer such as the superior returns on saving as compared to others that don’t. Saving is as simple as spending. If you intend to do it then just follow it like you follow your daily rituals.

We are listing down some wise saving options for the young working population:

ELSS: (Equity Linked Savings Scheme) is a diversified equity mutual fund which is qualified for tax exemption under section 80C of the Income Tax Act. ELSS is a good option to invest in, because the investor has the opportunity to invest in equity markets as well apart from getting benefits of tax deduction. Also, ELSS has the shortest lock- in period of three years as compared to other tax saving options.

Mutual Funds: Mutual funds are diverse in nature.. They are broadly divided into Equities, Debts and Balance funds. Here the money is pooled in by investors in many bonds, stocks and other types of investment. It also gives you the access to investment professionals who expertise to manage your funds in the best way possible So owning shares in a mutual fund instead of owning individual stocks or bonds the risks get spread out. Diversification ensures that a loss in a particular investment gets nullified by gain in another

ULIP’s: ULIP or Unit Linked insurance plan is a life insurance product that provides the risk cover to the policy holder accompanied by the option to invest for long term. Recurring Deposit : The concept is fairly simple. You can allocate a fixed amount of money every month as deposit with a bank for a period that you specify. This will push you to save and invest on regular basis thus securing your future.

PPF :- The Public Provident Fund has been established by the central government. Any individual can open a PPF account with any nationalised bank or its branches that handle PPF accounts. The minimum amount to be deposited in this account is Rs 500 per year. The maximum amount you can deposit every year is Rs 100,000. The entire balance can be withdrawn upon maturity i.e after 15 years of the close of financial year . The rate of interest is decided upon the government every year. Currently the rate of interest and principle is exempted from tax at the time of deposit and withdrawal.

We hope that this article helps you out in thinking better and planning wisely. Happy Investing!

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How do I allocate my salary?

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Being at the point of time in our lives, where we finally feel financially able is enthralling. However, it is imperative to not go overboard on spending, and channelize our monetary resources.

We make numerous mistakes during this phase of our lives like we spend more than we earn.
This pushes us in a deep pit of financial fixes.
Hence, a steady income needs a steady management.

Striking the right balance between what we earn and what we save impacts our future positively and reduces the possibility of cash crunches.

But the most common question is “ How do we go about it it? How to distribute our salary for expenses and save?”
So having a financial plan in picture is a always a good sign. Below is one such plan that can help us in resolving the issue.

The Boon of Budgetary Planning: –

Having a well-schemed budget is as necessary as breathing and it is just the half battle won. Our pockets empty faster than they fill. They forever bear the “Low on cash” Tag

This efficacy of the plan lies in how we divide our expenditure into duties, obligations and splurges. At the end of the day, we earn to spend but we need to spend right.

So we should draw a plan that broadly classifies our division of expenditure into the following: –

Savings:-
Having a foresight for the future helps us guard our money better. The maestros of investment suggest that “Do not save what is left after spending, but spend what is left after saving”

We should dedicate 20 percent of our salary towards investments for future. Also savings should not be just confined to the walls of emergencies, savings can also be for planning our future better. This holds true, especially when the tax rates surge higher with passing time.We do not want to be like the sitting ducks to the taxing alligators. Regular and planned investment, eases the financial burden over a period of time, Gradually with this scheme of action, you won’t even realize the substantial chunk of funds that are left in your kitty.

Routine lifestyle expenses: –

Allot a good 50 percent towards your household finances. These finances are unavoidable and necessary. From rent to electricity bill, timely payment is essential. Plan your lifestyle in a way such that the expenses towards it do not surpass the allotted percentage.

For example: – Going overboard with the usage of electrical appliances or unnecessary wastage of power can render mammoth sized bills. So it is advisable to monitor and regulate the use.

Food and Clothing

Both of these fall in the “can’t live without category”, so we cannot really compromise. However what is in our hands is wise spending.

If we invest cautiously , we can have a good share of funds to choose from our favourite brand of garments.

Debt/Loans

Repayment should be one of your top priorities. Dilly-dallying the repayment, will only increase the burden on your shoulders and make them droop to the monetary pressure. Also, it spoils the credit score which in turn reduces your chance of accessing loan in the future.

The debts and dues need to be dutifully cleared. So a 25 percent should be allotted for this.

Recreational Purposes:-

Now you will still be left with some money, you can pamper yourself with some shopping sprees , binge eating and partying.

Because who wants a life filled with blues and greys . We believe “Jab jeb ho full toh Life Colourful”
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Default on loan can severely affect your credit score!

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Authored article by Akshay Mehrotra, Co-Founder & CEO, EarlySalary.com

Default on a loan can severely affect your credit history and may dramatically reduce your chance of getting any credit.

Sometimes when we are young we choose not paying credit card for various reasons. Sometimes we just don’t have the money, sometime, the utility of the benefit accrued from the loan is long gone and other priorities calls for money ahead of repayment or Sometimes, we are just outright lazy and keep doing late payments while knowing the consequences.

The fact is if once a delinquent, always a delinquent customer, Banks and other financial Institutions treat you with caution. It is necessary to understand how Financial Institutions look at your repayment track record and what are these credit bureaus. In 2005, CICRA (Credit Information Companies (Regulations) Act) came which paved way for specialized institutions for monitoring and recording all loans taken from Banks and other Financial Institutions. These companies (known as CICs) collect, process and present information about each borrower and assign a credit score. Today, there are four CICs in India, CIBIL, Equifax, Experian and CRIF High Mark. Hence, A credit history of every customer submitted to all four bureaus, which allows Financial Institutions to dive into and judge whether a customer applying is worthy to give loan or not.

Credit information by definition could means any information relating to :—

  • The amounts and the nature of loans, amounts outstanding by a credit institution to any borrower;
  • The nature of security provided by borrower;
  • The guarantee furnished;

Does giving guarantee for someone else’s Loan also impact Scores? – The answer in short is yes. The financial institutions send the guarantor details to CICs, in addition to a person taking loans. Hence it is important to understand that the role of a guarantor is crucial. If the borrower defaults, then you as the guarantor will suffer too as you too will be in the “defaulter” basket. Thus, Think hard before becoming a guarantor.

Not performing on loans and credit products severely impacts your credit score; a credit score basically is a system that enables a credit institution to assess the creditworthiness and capacity of a borrower to repay his/her loan and advance. While it is subjective and depends on Institutions’ internal policies, but according to my understanding a late payment on a credit card will severely impact one’s chance of getting a personal or Home loan.

Hence, taking a loan from one bank and thinking no other bank will know the credit history, is a fool’s paradise. If you are not repaying your credit, the information will be accessed by the financial institution who can lend to you and it will affect their decision.

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