Holi, the festival of colours, is just around the corner. Whether it is kids or adults, everyone enjoys Holi and plays with enthusiasm.
We can also derive few money lessons from this festival of colours. Here are the three main money lessons from Holi.
It is very common to see girls and women oiling their hair or getting it oiled by their family members or friends. And not just women, even men make it a point to take care of their hair and face before getting down to playing Holi. It is done to protect oneself from the harmful chemicals present in the Holi colours.
Just like we protect ourselves before playing Holi, it is also important to protect your money from yourself (yes, you heard it right) and market volatility.
The savings account is one of the simplest saving options that most people can open instantly and deposit their money. Saving money is important as it helps us to achieve our financial goals. However, most of us are not able to save adequately for our goals. We come in between ourselves and saving goals.
One easy way to make sure that we are always spot on with your savings is to save a certain percentage of your income without fail. If you have two savings accounts, then you can set up a standing instruction that transfers a certain proportion of your income to another account. This will make sure that your money is liquid and you can withdraw easily through the ATM card or net banking etc.
Moreover, recurring deposits (RD) and fixed deposits (FD) are also safe ways to deposit your money and earn higher interest rates. In recurring deposits, customers can save a certain percentage of money every month. Currently, you can open an RD with your mobile banking app and the RD amount is automatically transferred from your savings account to your recurring account. Fixed deposit is also a safe option where customers can deposit a higher amount at one go.
Holi is a festival of colours. Holi can’t be imagined without various colours. Just like Holi, your saving and investment options also need to have a splash of colours. And by a splash of colours, we mean diversification. Whether it is a savings account, fixed deposits, or investment options such as mutual funds or stocks, it is always a good idea to have diversity.
We believe that one savings account or fixed deposits in one bank are sufficient. However, having at least two savings accounts can be beneficial to you. While you may have one salary account, you can have another savings account that offers a higher interest rate without any minimum average minimum balance. Online savings account such as Kotak 811 can be opened instantly after downloading the mobile banking app. This savings account can be used for various purposes such as an emergency fund, splurge account etc.
Moreover, you need to be careful while depositing your hard-earned money in cooperative banks or small finance banks. If you have saving accounts in such banks, you can look at diversifying and opening bank accounts with big banks.
According to the RBI guidelines, deposits (including savings account, RD, FD) of up to Rs.1 lakh (proposed Rs.5 lakh) is insured by the Deposit Insurance and Credit Guarantee Corporation (DICGC). This means that if the bank goes bust, customers can only receive the insured amount irrespective of the actual deposit.
Also, in fixed deposits, gains above Rs.40,000 from a single bank in a financial year is taxed according to the income slab of the depositor. Opening fixed deposits in different banks and of different tenures matching your financial goals can help you to be tax-efficient.
Holi celebrates the victory of good over evil. Overspending is one such evil that is important to get rid of before we can think of having any meaningful savings. While it is hard to resist temptation, you can set up automatic saving mechanisms through Recurring Deposit (RD) or systematic investment plans (SIP) in mutual funds where a certain proportion of your income will be saved or invested at regular intervals. It will save you from the headache of doing the uphill task of saving money at the end of the month as now you can save money right after you receive the salary.
This year, while you pay Holi, also keep in mind the various money lessons that Holi can teach you and add colours to your saving and investment options.Tags: savings account, recurring account, fixed deposit, money lessons form holi, diversification, safer investment options, holi
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