New vs Old Tax Regime – What’s better for you?

“The objective of tax planning must be to keep more of what you earn, legally”

– Emkon Global

There are no free lunches. That has been made clear by our government. A new tax regime for Individuals was introduced during this year’s budget. This becomes applicable for the current financial year for which tax returns will be prepared post-March 2021. The new regime comes with lower tax rates and higher slabs – something we have all been waiting for.

However, the catch is that you have to CHOOSE between the old (Current) tax regime and the new tax regime. The new regime does not make things easier for laymen.

Old (Current) Tax Regime

It would be safe to say the old system is a bit complicated but offers plenty of benefits in the form of deductions. If you have filed your tax returns regularly, you would know that you have to make certain investments such as Public Provident Funds, Tax Saver Mutual Funds or Bonds, LIC Premiums or Mediclaim and many more such avenues every year to avail deductions that help you reduce your taxation liability.

As per the old tax regime, we have been following so far, every individual has different tax slab applicability considering age & gender. However, approximately ₹ 1,50,000 to ₹ 2,50,000 are invested by middle-income individuals every year to avail tax benefits.

New Tax Regime

Key Points

  1. The new tax regime does not allow 70 deductions which were allowed in the old regime.
  2. The option to choose this new scheme is available only for INDIVIDUALS.
  3. If you choose the new regime, you can switch back to the old regime any year you want if you only have salary income.

Here’s a comparison between the old tax slabs & rates vs the new tax slabs & rates:

Tax Slab (₹)Old Tax RatesNew Tax Rates
0 – 2,50,0000%0%
2,50,000 – 5,00,0005%5%
5,00,000 – 7,50,00020%10%
7,50,000 – 10,00,00020%15%
10,00,000 – 12,50,00030%20%
12,50,000 – 15,00,00030%25%
15,00,000 & above30%30%

So which one to choose? – Old or New?

The middle-income individuals happen to be the most likely to be impacted by pay cuts and layoffs as a result of the economic crisis that has started during the ongoing pandemic.

Having an additional few lakhs disposable at hand would be worth it and hence all individuals should consider filing their next year returns by opting the new tax regime. It would give you a chance to avoid making investments where there are lock-in periods or limitations on withdrawal. Considering the possibility of financial troubles, having more money at your disposal would add to your financial security.

So if you are someone who is cash-strapped or could possibly be impacted by pay cuts or layoffs, a clear winner for you is the NEW Regime.

It’s worth noting that you can switch back to the old regime anytime in the following years unless you are an individual who also has income from business & profession. If you have income from business & profession, you have only one chance of switching back until the time you have business income.

We suggest this only for individuals to have more liquidity at their disposals.

Under regular circumstances, there is NO clear answer that would apply to all individuals. It depends on what kind of deductions you have been claiming and also your age.

It is necessary to do a new vs old evaluation to compare in which regime you save money.

Scenario 1. – If you avail all common deductions

Mr Harsh has an income of Rs. 12,50,000 from salary. He utilises his Section 80C limit of Rs. 1,50,000 by investing in Tax saver mutual funds and PPF. He also pays Rs. 40,000 for mediclaim deductible under Section 80D. Only Rs. 25,000 of that amount is allowed as deduction since he is not a senior citizen.

Here’s how his tax computation looks like under the old and new system.

Income Tax Computation
ParticularsOld Tax Regime (₹)New Tax Regime (₹)
Annual Income [A]12,50,00012,50,000
1) Standard Deduction(50,000)0
2) Section 80C (PPF, etc)(1,50,000)0
3) House Rent Allowance(50,000)0
4) Section 80D (Mediclaim)(25,000)0
5) Leave Travel Allowance(25,000)0
6) Section 80CCD (NPS)(30,000)0
Total [B]3,30,0000
Net Taxable Income [A-B]Rs. 9,20,000Rs. 12,50,000
Tax SlabsOld RatesNew RatesTax (Old)Tax (New)
0 – 2,50,0000%0%00
2,50,000 – 5,00,0005%5%12,50012,500
5,00,000 – 7,50,00020%10%50,00025,000
7,50,000 – 10,00,00020%15%34,00037,500
10,00,000-12,50,00030%20%050,000
Net Tax96,5001,25,000
Cess3,8605,000
Gross Tax 1,00,360 1,30,000

In this scenario, the clear choice is the Old system as there is a saving of Rs. 29,640

Scenario 2. – If you avail lesser deductions

Ms Harshika has an income of Rs. 9,00,000 from salary. She utilises her Section 80C limit to the extent of Rs. 50,000 by investing in Employee Provident Fund and tax saver mutual funds. She does have a few investments in the stock market but they are not eligible for deduction.

Here’s how his tax computation looks like under the old and new system.

Income Tax Computation
ParticularsOld Tax Regime (₹)New Tax Regime (₹)
Annual Income [A]9,00,0009,00,000
1) Standard Deduction(50,000)0
2) Section 80C (50,000)0
3) Leave Travel Allowance(25,000)0
Total [B]1,25,0000
Net Taxable Income [A-B]₹ 7,75,000₹ 9,00,000
Tax SlabOld RatesNew RatesTax (Old)Tax (New)
0 – 2,50,0000%0%00
2,50,000 – 5,00,0005%5%12,50012,500
5,00,000 – 7,50,00020%10%50,00025,000
7,50,000 – 10,00,00020%15%5,00022,500
Net Tax67,50060,000
Cess2,7002,400
Gross Tax 70,200 62,400

In this scenario, the clear choice is the New system as there is a saving of Rs. 7,800

Conclusion

The only conclusion that you should draw from the above two illustrations is that there is no blanket solution applicable to all individuals. Factors like your income, age (Senior citizens have more benefits under the old system), the number of deductions you avail and your financial situation for this year considering the recession at large will determine which regime is better for you.

Do not pay attention to any blanket claims that old or new is good for you. There is no one-size-fits-all solution there. Consult your Tax Return Preparer or Chartered Accountant to make an informed decision.

The bottom line is – Do an Old vs New Tax computation to arrive at a decision.

How you can avoid a Personal Financial Crisis during the Pandemic

These are probably one of the most challenging times we will witness during our lifetime. Pandemics are not a common phenomenon: this is only the 8th one in the history of mankind. We are lucky that this is the digital age because the internet is why we’ve been able to exchange and disseminate critical information and precautionary measures so quickly and so widespread. And yet, we have two completely polarizing groups: one that thinks this is the end of the world and one that is completely down-playing it. The middle ground is where you would want to be – take enough precautions and yet be calm in the face of adversity! (or calmly panic as I’d like to put it!)

We are looking at a health crisis that has spiralled into an economic crisis (Yes! You read right! It’s already happening). There are millions of people just in India who depend on their monthly or daily incomes for survival. Everybody is concerned about their incomes, healthcare expenses, loan repayments, and livelihood in the months to come.

There are also millions of businesses that cannot operate from home. The aviation industry, travel & tourism, manufacturing setups, sports & entertainment industry, salons, etc. are already on their knees.

If you are a business owner, irrespective of the nature of your business, it will be affected right now. However, you can avoid getting “personally” affected and take care of your family as well.

Here are some facts:

1. The number of coronavirus infected patients reached 1 lakh on 2nd March, 3 months after it began. And then the number more than doubled in 15 days.
2. The Indian stock markets have hit a 3-year low.
3. Only 35-40% of Indians have health insurance.
4. 20% of the infected will require hospital care, which is beyond any country’s healthcare capacity to support these numbers.

So, without further ado, here are 3 things you should be doing to manage your finances:

1. Put aside liquidity for the next 6-12 months

It may sound like too much to ask for. But this is how you take care of the uncertainty that is unfolding right in front of us. First things first, nobody really knows how long the pandemic is going to last. Scientists have said that a vaccine could take anywhere between a year and 18 months. So the timeline of finding a vaccine, putting it into mass production and making it available everywhere in the world could take a reasonable period of time.

Normalcy won’t be restored the moment a vaccine is discovered, it’ll be restored when we have ceased the spread of the virus completely!

Currently, you would either be working from home or be on your way to doing so. However, numerous businesses have had to temporarily shut down operations. More than the owners, the employees have to face the consequences of this. In a lot of cases, employees are being given unpaid leaves. If that is you, you should think about keeping cash for your monthly survival.

Here’s you calculate this: Only calculate the amount for necessities to live – Food, utilities and shelter for a month. Example:

Rent/EMI 15,000
Groceries 5,000
Telephone 500
Internet 1,000
Electricity 1,500
 Total 23,000
For 6 months ₹1,38,000

Put aside funds for this sum as it will take care of you for the foreseeable future. It’s a healthy practice to have an emergency fund and this point in time does qualify as one.

P.S – If you are cash strapped, you might want to refrain from adding Netflix & other subscriptions in this list.

2. Stray away from the stock market if you are a layman

The stock market is in a freefall, is it the time to pick up the pieces of the ‘big’ companies. They surely would come back to the top right? Maybe. But how long will that take? Nobody can say for sure.

The indices are already tumbling, merely on the news of these things happening. Once the year-end numbers start coming up, realistically speaking, it’s going to slide down further. Now you are likely to hear people saying you should be investing in stocks right now and that this is a golden opportunity. However, if you don’t exercise prudence and make responsible decisions, you might just end up trying to catch a falling knife!

The economy is taking a serious hit. India was already in an economic slowdown, and the pandemic is only making the situation worse. It would be prudent to avoid making any financial decisions without the calculated advice of your financial advisor. However, if you need funds to make up for your emergency fund, you may need to withdraw funds from the stock market.

Strongly advise to not pay heed to generic advice that keeps popping up on banking and news apps and to speak to your financial advisor (or find one!).

3. Mediclaim your way to protect yourself and your family from Coronavirus

You’d think that the leading reason for people going bankrupt would be bad financial decisions which then culminates into default in loan repayments or the selling of crucial assets to do so. The leading reason happens to be medical expenses after lengthy hospitalisations.

The expenses of dealing with hospitalization are so high that it renders people bankrupt! The way out of this scenario is to get Mediclaim. Many employees get covered by the companies they work for – this is typical of corporates.

If you work in an unorganised sector in India, it is very likely that your employer has not covered you. You need to look out for yourself and your family’s medical expenses if the need arises. In such a scenario, if you have availed of Mediclaim independently, you are likely to get a lot of relief from out-of-pocket medical expenses.

And that’s it, folks! These are three tips for managing your personal finances in our current times of crisis. Stay safe, wash your hands and #socialdistancing. Reach out to us if you need any advisory.

What is a Business Dashboard? Do you need one?

Do you drive a car? If not, have you ever been in a car? I am almost certain you’ll say yes to one of these questions.

A dashboard is a control panel located directly ahead of a vehicle’s driver, behind the steering wheel displaying instrumentation and controls for the vehicle’s operation. A driver uses the dashboard to make all the possible decisions he has to when he is driving or isn’t driving. He can track his speed, know when to refuel, any engine issues, whether any doors are not locked properly etc. In fact, any car’s dashboard has anywhere between 10-20 useful metrics.

Now imagine if the car did not have a dashboard; you wouldn’t able to track your speed, you’ll have to manually check the fuel levels (or automatically when it’s empty!) and you’ll be alerted about any engine issues by smoke only! The dashboard communicates everything a driver needs to know about the health of the car and in turn, this information is used to make any further decisions.

Similarly, a business dashboard or a dashboard is a decision-making tool which will give a “Live Health Check” of your organisation. Information related to the key metrics is aggregated and condensed from the Management Information System (MIS) reports. Indicators are applied to this information to make it valuable and insight-providing. These indicators will help you make informed business decisions. You will know exactly where your business stands and it will be mapped against where you wanted your business to be! Dashboards are customised to every different business depending on the industry, size, number of functions and the executive’s needs.

What’s it in for you?

1.  Ease of Data Access

Do you have trouble finding the data that you need? And when you need it the most? Be it sales, marketing, finances, production, etc. Get all the key information readily available at one place without having to contact multiple departmental heads for the same.

2.  Calculated decision making

A dashboard will present you with all the parameters that you may require to make a business decision. Do you need more financing? Is the stock enough? Where can we increase profitability? Do I need to hire more staff? Or do I need to work on the efficiency of my current staff? All your questions shall be answered.

3.  Areas for improvement

By using a dashboard you will be in a position to identify which department needs your attention and then you can zero in on the root cause to make sure what needs to do in order to get that function at its efficiency.

4.  Know what’s happening

If you are a business owner who is often on the road and yet, likes to keep a tab on the office operations, the business dashboard is your remote control. You can operate and make key decisions from any part of the world using just a dashboard.

5.  Visual Representation  

Dashboards incorporate a graphical representation of key metrics such as Sales, Profitability, Production, etc. which can be tailor-made as per an executive’s needs. It is certainly true that a picture speaks a thousand words – and so do pie charts and bar graphs!

6.  See the Big Picture

As entrepreneurs, you have the vision to need to remain in alignment with. The dashboard will tell you whether you are on track with your long terms and if not, it will tell you the deviation so that you can take some actions and get back on the horse ASAP! How else do you think companies like Microsoft and Google run?

There are dozens of Softwares available online for dashboards. However, if you are a startup or an SME, we can make a Dashboard in Excel or Google Sheets and that would be enough to care for your needs for a while!

How to travel for 30 days every year in spite of working full time!

“Jobs fill your pocket. Adventures fill your soul.”

Just about three years ago, I realised that just two short trips every year wasn’t enough and at this rate how much of the world would I be able to explore? Nope, this wasn’t a happy realisation. I had to do something about it.

After doing a short survey with about 15 people who work full time as entrepreneurs or employees, 25% of them traveled for less than 15 days last year and the rest, less than a week and some did not travel at all last year! When asked how long they would ideally like to travel – the general answer was about 15-20 days.

I will tell you how you can travel for at least 30 days. And I mean real vacations – short trips of 4 days and long trips of 7 days or more and that’s excluding the weekend getaways to your beaten to death hill stations where you’ve been to a thousand times.

This is how I started traveling a lot more in just four steps (I am not saying it was easy, but you have to start somewhere!)

1. Change in perspective

If I wanted to travel more, I needed a little ‘change in perspective’ of how I looked at travelling. I realised that travelling wasn’t an end goal for me. I don’t want to accumulate money till 60 and then go berserk traveling. I want traveling to be a “way of living” for me.

2. Budgeting

Once I calculated how much I intended to travel every year, I started saving and immediately earmarking funds for such trips. Now, I categorize my trips into short/long trips and backpacking/luxury trips. I use financial tools such as SIPs, recurring deposits and other instruments to keep funds aside.

3. Planning

When I was working, my bosses would often tell me a straight NO if I applied for leaves on a very short notice. I changed my strategy and started applying for leaves 6 months prior to my trips. It has multi-fold benefits: flights are cheaper, accommodation costs are discounted and leave approvals became a cake walk.

4. Creating steady revenue streams

This is the most important step. If you want to travel, you need to spend money; and if you want to spend money, you need to earn money first. Now earning money while travelling cannot happen unless you are a travel blogger, photographer or videographer. I am none of these; I am a Business systems consultant. To get over this issue, I created a system around me to ensure that there is money coming in even when I am going out!

And it’s working beautifully for me. In the last 4 years, I have travelled to 26 different locations on 18 trips, accumulating to about 168 days (42 days every year) The number may not be a staggering one for a full-time traveller, but it will definitely mean something for someone who is company-employed or self-employed full time.

Tap Dance to Work Everyday! (Do you really love what you do?)

There are numerous people who absolutely hate their jobs but just cannot leave them. They have dreadful bosses but wonderful colleagues or wonderful bosses but dreadful colleagues.

The worst; they don’t like the work they are doing; day in – day out. They will not leave either because they are stuck in golden handcuffs (Splendid salary & perks) or because they really don’t know what their passion really is! They may know their strengths but cannot back it up with courage.

There is another unique reason only us Indians can boast about. We are doing the job for which we slogged for years in college and post grad. It wasn’t by choice. It was our “parents’ dream”!

“Everybody is a genius. But if you judge a fish by its ability to climb a tree, it will live its whole life believing that it is stupid”

I love this quote. Some say it was quoted by Albert Einstein. Nevertheless, it’s an amazing quote to talk about. To back up this quote, I found an amazing story to tag along as well. Here it goes:

One upon a time the animals had a school. The curriculum consisted of running, climbing, flying and swimming, and all the animals took all the subjects.

The Duck was good in swimming—better than his instructor—and he made passing grades in flying, but he was practically hopeless in running. Because he was low in this subject, he was made to stay after school and drop his swimming class in order to practice running. He kept this up until he was only average in swimming, but the average was passing so nobody worried about that except the duck.

The Eagle was considered a problem pupil and was disciplined severely. He beat all others to the top of the tree in the climbing class, but he always used his own way of getting there.

The Rabbit started at the top of the class in running, but he had a nervous breakdown and had to drop out of school on account of so much make-up work in swimming.

The Squirrel led the climbing class, but his flying teacher made him start his flying from the ground up instead of from the top down, and he developed overexertion at the take-off and began getting C’s in climbing and D’s in running.

None of the animals were happy!

Do what makes you happy. Back your strengths. If you like numbers, take up a job involving that. If you love talking, how about teaching or counselling? Or even sales? Our educational system is traditionally designed to groom us into ‘employees’. I know a guy who barely passed 10th STD but has his own tours & travels agency because he loves travelling. He is on the verge of starting his own hotel too! It’s better to invent a job than finding one.

“LOOK FOR THE JOB THAT YOU WOULD TAKE IF YOU DIDN’T NEED A JOB.” Doing otherwise, or what he calls “sleepwalking through life,” is “like saving up sex for your old age. It’s not a good idea!”

That last comment makes the audience laugh. But, jokes aside, he says, “You really want to be doing what you love doing.” And if you don’t connect strongly to your first job or two, “don’t give up before you find it.”

– Warren Buffett, chairman and CEO of Berkshire Hathaway 

Cheers!

The ideal Workspace if you’ve just started out

“A disorganized workspace means disorganized work habits. A sloppy work environment equals sloppy results.” – Larry Winget

If you are a newly started entrepreneur who is starting from scratch using your own capital, you must have already wracked your brains about where you should be working from. Working from home can be tricky. Getting your own office can be expensive. Co-working spaces are trending at the moment. Cafes are exciting!

What’s it gonna be? So let’s get right to it.

How about renting an office space?

An absolute NO! If you are starting out, there is no worse way to drain your capital than by renting an office. It’s not just the rent that’s an expense, you have to account for maintenance, electricity, office supplies, stationery, some furniture, printer, paper etc.

It would be a good idea to rent an office space once you have some fixed average monthly inflow, a couple of employees and your line of work requires you to have an office. However, as long as you are working by yourself, with not enough clientele and your savings to live on; an office space will do you no good.

The trending Co-working spaces

A co-working space makes economic sense for professionals or entrepreneurs working alone; because the cost is per desk or workstation. There is a huge upside of networking at co-working spaces. That aspect is very much location specific. There is no harm in trying out these office arrangements. The factors to be considered are commute time, benefits of networking for your product/service and the cost.

Work from home

If you’ve ever been in a job before, you’ll find the idea of work from home amazing. The idea of doing the boring stuff from your comfort place while listening to music and munching snacks; that was the dream! As an entrepreneur, the work dynamics completely change. You are working with much more dedication, you are on the phone all the time and you are meeting a lot of people. Saying “Home” may not sound like the best answer when a prospective client asks “Where is your office located?”. Also, the environment at home is so warming it can actually hamper your productivity.

Although it’s not impossible to work from home, most successful businesses do start out that way but evolve into a proper office space ASAP.

Other makeshift alternatives

Cafe. There is a new cafe propping up every day in Mumbai. If you are brainstorming with your partners or simply ideating by yourself – cafes are beautiful places. With the kind of ambience modern day cafes offer, ideas just flow well. However, going to a cafe is an Rs. 800-Rs. 1000 for a day affair. It really is a once in a while treat for yourself. I personally like Starbucks for working by myself or even hosting meetings.

Sports Club. This is where I got creative. When I had just started out, I had no budget for even sitting in a cafe and working from home was not fruitful – I decided to work in the reading area of the Sports Club where I go for swimming. It was deserted. That was the best thing I did to save money, work efficiently, make a dozen sales calls each day with all the privacy I want and then go for a swim at the end of the day!

The Ideal Workspace

For a new entrepreneur, the ideal workspace would be to rent out a conference room or a cabin at the office of a friend or a relative or an associate. If you don’t know someone like this, you have started off on the wrong foot as an entrepreneur. Most people who have conference rooms use them once or twice a week. It is well-furnished and has all the amenities. This workspace alternative only has benefits. You get enough space. You pay a nominal rent (assuming you have a stellar rapport with the friend/relative). You can host meetings there. Everything is taken care of – Stationery, office supplies, cleaning, furniture, electricity etc. Just go for it!

Best way to choose a name for your Business!

“Nothing in marketing can succeed unless the name is right. The best company, the best product, the best packaging, and the best marketing in the world won’t work if the name is wrong.” – Al Ries, Marketing Expert

Once your business idea is brewed and it is clear that you will follow the entrepreneurial path, there’s only one thing that can stop you from formally forming a company, making a visiting card, your website or setting up an office – The Business Name.

A name is important. It becomes your organisation’s identity. In some cases, it could represent the values. In some cases, it may represent your product’s quality. In today’s world, it really represents how visible and unique you are.

A few years or a decade ago, naming your company would’ve been the easiest thing to do. However, with social media being your numero uno place for marketing it is quite essential that your name be a standout and you get a unique domain name for the website as well. What better than your website being the first link displayed on Google when searched!

Here are seven steps for you to come up with a name –

1. List down all related words

If you are setting up an entity in the healthcare segment, your list of words could be care, nutrition, strength, health, wellness, power, muscle, lean, fit, and more. These words are your gateway to commencing the naming ceremony – the starting point.

2. Synonyms and meanings

A dictionary and thesaurus come in very handy here. Or simply Google. One by one check the synonyms and meanings of all the words you have penned down in step 1. Oftentimes, you will stumble upon an interesting sounding synonym which has a simple meaning and yet it is unique.

3. Combo it up

Don’t be afraid to combine two words to form a name. It can be a fun exercise. For example, if you were naming a gym – athlete + lean = athlean (Name’s already taken!). Veritus (Meaning Truth in Latin) + Horizon = Verizon. Nintendou breaks into Nin which means something along the lines of entrusted and ten-dou means heaven.

Tools:

Word Combiner

4. Words from other languages

Some simple words sound tremendously interesting in a different language. Try out French, German, Latin, Spanish etc. any language that uses English letters! For example, Sony comes from ‘Sonus’ which is a Latin word for ‘Sound’. Lego comes from the Danish language “leg godt” which means to play well.

5. Abbreviations

Abbreviations can be amazing. The just get stuck on your tongue. The long form could be something boring but the acronym could sound very catchy. For example, PVR is actually a joint venture agreement between Priya Exhibitors Private Limited and Village Roadshow Limited. FCUK, although looks like a pun actually stands for French Connection UK. Many more examples like NASA, SHIELD (from Marvels!) etcetera

6. The Litmus Test – How unique is your name?

Let’s say you’ve narrowed 2 or 3 names, which one do you go for? How do you choose the final name? The ultimate test is to make sure the domain name is available by the same name. Always go for a .com. If .com is not available then go for the country-specific extension: .in being for us Indians.

What if both are not available and you really like the name? Is it a good idea to go for a different extension like .co.in or .biz or .tv or the likes. It’s gonna take some effort and good SEO to get your site to higher search results. Although difficult, it is not impossible. But I have evidence that with good SEO comes good results on Google search. Simplywall.st is a terrific example.

Tools:

Trademark Search

7. Should the name be related to the product?

Yes and no. It can be beneficial to have the name that conveys what the company is about. For example. The Coca Cola Company, Microsoft, Wealthharvest, etc. However, the world’s largest companies have names that are absolutely unrelated to what they do. For example, Google (Meaningless word!), Amazon (it’s a river), Apple (it’s a fruit), Blackberry (again!), etc. Although it can be argued that they are famous now so it doesn’t matter, however, they were small businesses at some point! So how you market and brand your company matters!

Tracking your expenses will make you rich!

“Don’t save what is left after spending. Spend what is left after saving” – Warren Buffett

If you are someone who wonders at the end of the month; where did all the money go? You need to start tracking your expenses ASAP!

Why is it even important to track your spendings? 

It helps you become aware of your own spending habits. Today, with so many transactions happening digitally, we swipe our credit cards or shop digitally or use e-wallets in a snap. It has been proven that if you spend money using hard cash, you may end up not spending as much as you would digitally. The actual feeling of parting with your money physically makes you think twice!

This is how tracking my expenses made me rich! (Not literally)

Tracking helps you identify exactly where you are overspending.

A few years ago, I noticed my biggest expenditure every month after travelling (which was something I couldn’t cut down upon) was spending on outside food, especially weekend outings with friends. If you live in Mumbai, you’d know what I’m talking about. The purpose of those outings was to catch up with friends and unwind a bit. That could be done at a much lower cost and different venues too. Without compromising my outings, I still managed to save an easy Rs. 4,000 monthly i.e. Rs. 48,000 annually. This extra saving in my hand invested at 15% compounding annually stands at Rs. 1,43,762 in just three years! Isn’t that amazing?

The “How to” Guide

Step 1: Get an Expense Manager App for tracking your cash expenses

Step 2: After you have made an expense, immediately record it in the app or at the end of the day.

Step 3: Don’t use e-wallets as the multiple transactions don’t get reflected on your bank statement. Spend digitally directly using your debit card or credit card.

Step 4: At the end of the month, export your expense report from your App along with your bank statements.

Step 5: Analyse your spending pattern. Cut down wherever you can. Exercise discipline in areas you are overspending.

Step 6: Invest the saved money every month in an investment vehicle giving at least 12% return per annum.

Step 7: Get rich!

Save 10 hours for every 1 hour of Planning!

“Every minute you spend in planning saves 10 minutes in execution; this gives you a 1,000 percent Return on Energy!” – Brian Tracy

Weekly planning is one step towards a more productive week. It is the only tool to beat procrastination and inertia. While you are starting a new week, spend one hour for planning your tasks ahead. To plan your activities, it’s important to WRITE actions down; not simply think about it. What gets written has the higher chance of getting done! So what actions will you take this week?

Although planning has many layers, here’s a simple questionnaire to get you started. Answer these questions and you’ll have a huge list of actions for the week.

  1. Whom do I need to call?
  2. Whom do I need to meet?
  3. What tasks do I need to finish pending from last week?
  4. What bills do I need to pay?
  5. Who do I have to collect money from? Whom do I owe money?
  6. Household errands to be done? (Repairs, purchases etc)
  7. What one thing can I do this week that I have been putting off for a long time?
  8. What tasks need to be done by this week? (Priority work)
  9. What actions will I take to reach my long-term goals? (Buying a house, travelling the world, saving money etc)

Once you have your list of actions, all you need to do is

  • prioritize
  • learn to say “no” to people if they ask you to do anything that’s not on your list
  • focus only on the tasks at hand (unless something very very very important comes along!)
  • schedule the tasks (day & time)
  • repeat this process next week and the week after that and forever!

Why do most Small Businesses fail?

“Most small businesses failed because the owner was under-skilled, not under-capitalized”

– Robert Kiyosaki

Business failure isn’t something you think about when you start a business. Only about one-third of the small businesses that start survive for ten years or more! The statistics seem to be grim. Although the reasons can be numerous, the most prominent ones being lack of planning, poor management of finance & operations and not scaling up efficiently. Let’s look at them one by one.

1. Lack of proper planning

The idea of entrepreneurship is so exciting that most entrepreneurs completely miss out on the nuances of running a business. They fail to budget workforce needs, working capital, long-term expenses, maintaining proper accounts, strategising, analysis, etc. Everything is an on-the-go-as-we-need basis. Lack of planning can be an understatement, sometimes there is zero planning.

2. Poor management 

Most business owners are people who have worked in the same line of business previously as an employee. They make the fatal mistake of assuming that “knowing the line of business” is equal to “knowing ‘how to run’ that line of business”. That is where the downfall starts. Accounts, cashflows, finance, taxation, other compliances etc. all take a tumble.

3. Inefficient scaling up

Either the scaling up happens too soon, without the right research and analysis or it just doesn’t happen. Most businesses grow turnover-wise but forget to grow workforce-wise – that’s where the inefficient scaling up phase starts. This leads to automatic loss of business and a stagnant growth. There is no business system to go forward with.