Managing expenses in tough economic times

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DURING hard economic times, there is a need to look closely at various financial transactions that are undertaken.

Analysing income and investments is just the starting point. What also needs to be done is to take a very close look at the manner in which expenses are undertaken. This is one area that holds out hope for the improvement in financial position.

Proper attention will ensure that there are gains that are available in several other areas also.

Large discounts: When the conditions are tough and sales are hard to get, various marketers also get into the thick of things and one way by which they try to induce people to spend is by offering large discounts on their products. The presence of a discount should not be the reason why an individual should undertake an expense. We should look at several factors to ensure that a right decision is being made. The first thing that needs to be checked is the exact nature of the discount.

Thus, it could be that the purchase of a specific item would lead to a discount to the tune of 15-20 per cent. This is something that can lead to cost savings compared with some other discounts that allow the individual to get some discount on some future purchase. In the latter case, it actually leads to additional expenses.

Need for purchase: The best way to start this process is to actually look at the item where the discount is available and then ask a very simple question. Is there a need to purchase this particular item or service or can the purchase be put off without any implication? This would provide the right base from which the process can be started and, hence, the exact need would be revealed. It could be that there is actually zero need as far as the item is concerned, so if that is case, then there should not be an expense at all. If this kind of analysis is not done and expenses are made just because some benefit is being offered on it, then the situation can get tough because it would be very difficult to say no.

Value of item: Another point that also needs attention is the actual value of the item that has the discount offer on it. If the value of the item is very small, then the discount might not matter at all, so there should not be a rush to ensure that the purchase is completed immediately. For example, if there is a situation where the item is worth Rs 60 and the discount being offered is 30 per cent, then the overall figure might not be so significant that would require a rush to get it by spending Rs 20 to complete the process. If the item has a high price and the discount is significant, then the savings can also be big, and, hence, the offer can be considered. Otherwise, all that the process does is place an additional expense burden on the individual.

Under control: At the end of the day, whether the discount is availed or whether the offer is put aside, there has to be one thing that should remain consistent. Every step should be part of the overall planning process that is done within limits set, so that there are no excesses. This will ensure that there is some moderation that is taking place and it will not put any pressure as far as the individual is concerned. It will also lead to a situation where the financial position also remains stable and wasteful expenses are avoided.

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Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.

Invest Tax Saving Mutual Funds Online

Tax Saving Mutual Funds Online

These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)

Download Tax Saving Mutual Fund Application Forms from all AMCs

Download Tax Saving Mutual Fund Applications

These Application Forms can be used for buying regular mutual funds also

Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )

1. HDFC TaxSaver
2. ICICI Prudential Tax Plan
3. DSP BlackRock Tax Saver Fund
4. Birla Sun Life Tax Relief '96
5. Reliance Tax Saver (ELSS) Fund
6. IDFC Tax Advantage (ELSS) Fund
7. SBI Magnum Tax Gain Scheme 1993
8. Sundaram Tax Saver

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