Why changing behavior is necessary for financial planning

The conclusion of the fiscal year is drawing nigh. It’s likely that in February and March, your company will take a larger tax deduction from your pay than normal. That’s because you were unable to provide documentation of your tax-linked investments.

Many of you would scramble to get your loan certificates, insurance statements, and conveyance or rent receipts in order to file last-minute tax advantages. Inadequate or nonexistent financial preparation leads to a rush towards year-end.

If tax preparation is something you really want to do, you should begin in April of each financial year. Invest a percentage of your monthly income in tax-saving plans to avoid having to make a lump sum payment at the end of the year.

Regularly investing more money into tax-saving gadgets is preferable than saving it later. The investment is typically locked in for three years. It cultivates a wise investing habit. For the longest time, your money must stay invested in order to take advantage of compounding.

However, tax planning is not the true problem. It also depends on how you see it. Most of you find it to be a hardship. You don’t have to worry about it. Taxes are an inevitable part of earning more money. It is better to plan for such possibility than to constantly discuss the tax load or the policies of the government. Unlike the Cayman Islands or other Caribbean nations, India is not a “tax haven.”

Both individual and corporate earnings are subject to direct taxes. Indirect taxes, like the goods and services tax, or GST, are levied on spending. Eventually, as a law-abiding citizen and person, you will have to pay taxes.

You are prepared to approach financial planning seriously after you have grasped it. Numerous surveys are available that illustrate how you allocate household assets. The majority of your funds are held in fixed deposits, gold, or real estate. Financial planning requires you to consider assets that regularly outperform inflation in addition to saving money. Your brain has been conditioned to think that equities and other financial assets aren’t legitimate investments, whereas gold and real estate are.

That is really harming your ability to make money in the future. For instance, in the 20 years leading up to 2000, the BSE Sensex increased from 100 to 3000. In 2020, it shifted to 65000. Conservative predictions indicate that it may surpass 7,000,00,000 by the year 2040. The increase in the index of underlying firms that comprise that index is a result of the growth in profits. Experts add and remove firms from the index on a regular basis to maintain its makeup. Investing consistently in an exchange-traded fund that tracks the Sensex would enable you to profit over the next two decades.

You cannot consider your investments to be gambling machines. India has the most options contracts, which is indicative of the country’s obsession with becoming wealthy “quickly.” Many of you have created a demat account and selected derivatives as your primary source of income. That indicates a propensity toward gambling. You may use speculation to protect your current investment. That cannot be your retirement income source.

Poker advertisements abound on television networks and over-the-top platforms, urging viewers to play poker online. Numerous thousands of people have downloaded applications that allow for online poker. You can’t become wealthy rapidly unless you inherit anything. It takes time and hard effort to become wealthy, but it is possible to make a respectable monthly income. It also necessitates that you concentrate on financial planning, which entails a methodical approach to consistent investment. It also entails reducing spending.

Distress may be detected in the management comments of consumer products businesses catering to middle-class and rural families. Due to low income and persistently increasing inflation over the last several years, items have become expensive. You need to either take on a part-time job in addition to your current day work or ask for a raise. Your hard-earned money, which is restricted, cannot be invested in unregulated instruments. Resist the temptation to spend and allow your equity holdings at least ten to fifteen years to appreciate. It pays sometimes to take your time.