Plan your Financial Calender

Thanks and Regards

Team

Saarthi Financial Planner

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Email: saarthifp@gmail.com

Balance your Assets to know Actual worth

When we ask any client if he is aware of his total outstanding loan amount across different categories of liabilities, his usual response is I will check with my bank and get back to you. Or else they give a rough estimate of paid EMIs. Similarly if we ask their total personal net worth there is a blank look on their face expressing their ignorance on the topic. As a financial planner, one of important aspect we present to our client in his final plan is his net worth. It is a statement of his net assets. Although in our practice, we avoid personal assets i.e. assets for personal use like home, jewellery, designer art etc. but it does form a part of your net worth if you are ready to part with it if financial needs arises. So let’s today discuss a simple approach to record our balance sheet.

 Some of common points to record your assets and liabilities 

1. Follow the practice review assets on regular basis. Be aware of their maturities dates and valuation changes.
2. Record Assets at their cost price. Only if you have done assessment of the same from a third party then feature them at market value. This is particularly true for real estate and precious stones.
3. Valuation of capital market instruments should be done on market value except for debt instruments (like bonds, bank deposits)
4. After sale of asset, the sale proceeds can be split as cost and profit (if any). So automatically, the cost gets reduced from balance sheet and profit is added to your cash/bank account. Over the years, your balance sheets balloons up with increasing investment either in business, advance given or capital markets.
5. The cash bank balances are fluctuating and so should be not considered as long term asset. It is grouped under current asset or spendable source.
6. There is no point of adding personal receivable in the assets if the loan is given in personal capacity without any fixed tenure of recovery.
7. In liabilities, ignore the total loan amount and only worry about the outstanding payment.
8. The loans can have a section for likely loan as contingency loan (It stands for likely to happen but not still occurred) – like giving a share to your siblings as part of your father’s will or wish- to be fulfilled by you.

Beyond this many times, our small proprietary business owner clients insist of adding their business goodwill and real estate in the personal balance sheet. This is only allowable if you are ready to dissolve your business and get rid of your business assets. Until then only tangible business assets can be shown as your recoverable portion. Further when you add asset, you should consider all the investments put by you in different family members’ name and it a family net worth including spouse, children and dependent parents. Also, this style of accounting is only for Personal finance simplification and would not necessarily match with your CA’s books. There is no fixed date to review your balance but it preferred to be done following financial or calendar year. So, go ahead and get a hang of your assets and liabilities. BE ALERT AND BEWARE.

A snapshot of recording your assets and liabilities 

Note- the above format is only a recommended one with popular list of assets and not an exhaustive one.

Thanks and Regards

Team

Saarthi Financial Planner

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Email: saarthifp@gmail.com

Simple Tips to maintain Accounting

Last week my husband was checking his bank account credits for hours to understand the outstanding credit of one of his client.With so many entries and rolling on pages, it was a tiresome for him to figure out the actual number. I asked him why doesn’t he simply extract the client ledger snapshot and send it to his client. He looked startled and stared back at me in a confused way. I knew this look; it was usually visible when I spoke anything related to accounts or book keeping. He asked me “why don’t you help me out to pull it. I am a non-commerce student and haven’t had the need to learn it”. So, I thought this might be a problem with many of the families, where it is difficult to track the daily expenses and cash movement. So, today we would discuss a few simple methods to track your expenses and cash account.

A few guidelines before you start

1. Keep all the family members in sync of procedure.
2. Ignore the paisa if you find it difficult to remember the exact amount.
3. Follow a fix pattern of review and data entry.
4. Keep records at one single place with single person maintaining them.
5. Use fixed code language to save time and allow account privacy.

Simple steps to follow:

Record your expenses

Keep two different records for your cash and non-cash expenses i.e credit card, debit card or cheque expenses.

Prepare a list of your ledger accounts.

A ledger is basically a record stating amount to be received or paid on a particular date. you can use the conventional method of note book or any other spread sheet available online. We can use various heads as follows:

1. utility bills – electricity, mobile, gas lines,
2. Vendor accounts- milkman, newspaper, laundry, AMC contractors
3. bank statements , credit/debit card details and so on others
4. Cash account – include your ATM withdrawals

A ledger is basically prepared by dividing the sheet into halves- on left side is amount to be paid and on right side is amount to be received. To this you can add details like date, details about the transaction and mode of payment. For every expense you add the word “to” standing for towards to describe it .For any income we start with "by” to stand for source of income. This ledger can be reconciled by checking the respective expenses. Ledger accounts are preferred to be made mainly for Personal accounts- i.e. for people (who can be taken to court for trial) and not for services.

Tally your accounts

Every expense made would have a corresponding entry in either your cash account, bank account or through your card. So, match all expenses with a corresponding entry in your individual account. Similarly, all your payments would be adjusted as income towards your services provided. 

This week we have discussed about expenses, later we would look at assets and liabilities. This is simple way to record your expenses without any further worry. KEEP  Recording and Analyzing your Funds.

Thanks and Regards

Team

Saarthi Financial Planner

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Email: saarthifp@gmail.com

All about - Minor PAN card

A PAN card is compulsory for a number of purposes, from paying taxes to buying physical investments or to make large investments and cash deposits. It is a misnomer that only an adult can apply for a PAN Card. Age is not the deciding for holding a PAN Card. NSDL has made provisions that even a minor can hold PAN card in his/her name.

Benefits of holding a PAN Card for minor

1. The whole purpose of creating a PAN card for a minor is to create a simple path for them in case if as parents or guardians, we intend to make them nominee or beneficiary of our assets.
2. To hold any investment we need to furnish a PAN Card for a minor.
3. The PAN card number is a permanent one and hence, it is associated with the minor for their life. It acts as a steady proof irrespective of any name / address change.

Although a PAN card is required to collate all tax related queries of an individual, it is not necessary that a minor holding PAN card is taxed. The minor’s income is clubbed with his parent’s income depending on the various conditions under clubbing of income. However, if the minor has earned from his own skill, physical labor or suffers from disability (defined in Sec 80U), then he is taxed for this income.

To fill in the new PAN CARD, please follow the link at https://tin.tin.nsdl.com/pan/form49Adsc.html

Thanks and Regards

Team

Saarthi Financial Planner

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Email: saarthifp@gmail.com

UPI karega India toh badega India

Lately, a lot of changes have been happening around us especially in the way our country’s economy is functioning. Every new day brings new announcement about the way we transact our daily money requirements. The whole hungama started with the announcement of starting of UPI by our ex RBI Governor Raghuram Rajan. He stressed for the need of making simple money transfer rather having to use multiple loaded applications or digital wallets. Having discussed the simplicity of digital wallets let us this week look at how simple is the working of UPI.

What is UPI?

UPI stands for Unified Payment Interface. It is arrangement to transfer money between any two bank accounts using a smartphone launched by NPCI (Authority responsible for all retail payment system in India). Currently is available on Android platforms but would soon be seen on Apple platform also. It is expected to replace the need to store multiple applications and widgets in the phone. RBI has mandated all the banks to make the UPI available to all their customers and currently around 19 banks have already introduced this system. It is expected to redundant all the digital transaction tools including digital wallets and reduce the usage of physical cash too.

The main motive of introducing this system is to focus on aam aadmi, who doesn’t use debit cards or credit cards on large scale or doesn’t have any digital wallets to make payments. It is to bring more people inclusion in the financial world. It would create a universal money transfer system, where money can be seamlessly moved across. It is a big revolution in banking which is expected to over the time even replace NEFT, RTGS and IMPS services which require various details for making fund transfer.

Mission Statement

To ensure payment and settlement systems in the country are safe, efficient, interoperable, authorised, accessible, inclusive and compliant with international standards.

Vision

To proactively encourage electronic payment systems for ushering in a less -cash society in India.

Source – NCPI / RBI Payment System 

Why is it preferred mode for transacting?

a) Easy to use- as simple as sending a text message to someone via your mobile
b) It is mobile based application- with around billion users of mobile phones in India and expected to double users in next years, this first on mobile payment system is very useful.
c) Quick and 24 x 7- the transfer of funds happens in few seconds of initiation and is available for all day long.
d) Interoperable – the system can be used to transfer funds across any bank accounts without need of any major account details of the receiver.
e) The UPI allows receiving and sending funds using the application. The use can create various MPIN logins from the registered mobile number across multiple bank accounts.
f) It is useful for making remittance, payment to relatives, useful for online merchant payments or even for making payment of your utility bills. 

Steps to start with UPI?

 
(Source – NCPI website)

So go ahead and make your plunge in the digital world. Enjoy the newly discovered joy of easy transactions.

Thanks and Regards

Team

Saarthi Financial Planner

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Email: saarthifp@gmail.com

EPF (EPS 1995) Pensioners Update

From 1st November 2016, EPFO has launched the facility of online submission of life certificate. It is mandatory to submit the digital Life Certificate through Jeevan Pramaan System life certificate. The pensioners should carry the Aadhaar Card, Mobile phone, details of PPO and Bank account number for hassle free submission of Digital Life Certificate.

The digital Life Certificate can be submitted at:

• Bank branches from where pensioners are drawing their pensions

• Common Service Centres(CSC) of IT department, the list of CSC are available at csc.gov.in

• Jeevan Pramaan Centre, the Jeevan Pramaan centre can be located at jeevanpramaan.gov.in

This process is Aadhaar based; therefore pensioners are advised to update their Aadhar details to reflect the accurate Name, Father Name and Date of Birth. The instructions and FAQs regarding the updation of Aadhar data are available on the website www.uidai.gov.in.


Please note that the payment of the monthly pension will be stopped after 31.12.2016, of those pensioners whose digital life certificates are not received.

Please spread this information as much as possible.

Source: EPFO Mailer.

#EPFO #PF #Employees ProvidentFund #ProvidentFund #SocialSecurity #SocialSecuritySchemes #IndianSocialSecuritySchems #Retirment #LifeCertificate #JeevanPramaan #JeevanPramaanPatra #CSC #Aadhaar #CommonServiceCentres #UIDAI #DigitalIndia #DigitalLifeCertificate  #EPS #EPS1995

Digital Wallets-Freedom from tension of Lost pocket wallets

Lately my kiranawala has been closing his shop early then usual timings. He is a man who helps you with even midnight shopping but it seems these days; his clients are taking too much on credit and on asking for payment request for card swipe. With shortage of currency notes, people are sort of turning towards plastic cards and online transactions for meeting their daily requirements on time. The poor shop keeper is a SSCE pass out person, who has grown big with his experience. He does not understand using the plastic money or the latest one catching craze of digital wallets. I am sure it’s just matter of time that he too would understand the benefits of these transaction methods.

So what is this system of digital payment? 

The system of using online mode of payment for use of any particular service or product is known as digital payment. Like till now we made our major payment in cash for shopping, utility bills or traveling. To carry the same, we required leather wallets that would hold our cash, licenses, shopping loyalty cards, family pictures making it bulky and difficult to fit in your back pocket. Although, with debit and credit cards usage, things got simpler but with our habit to carry multiple cards nothing seemed to change much.

So, with such physical difficulties and with growing fear of being robbed, it’s a good idea to have wallets online. It’s a mini revolution to move the cashless society.

So, a digital wallet simply refers to an electrical device or virtual device that allows us to make payments in our electronic commerce transactions. This payment can be made either from your desktop computer; tab or even your smartphone. You simply have to link your savings bank account to the wallet. By linking, I mean you instruct the wallet service provider to debit your particular linked bank account to pay for your expenses. It can store cash for making mobile, online or offline payments. Most digital wallets initially allowed users to transfer only up to Rs 10,000 every month on verification of only the email address and mobile number. This limit was increased to Rs 20,000 post demonetization by the Reserve Bank of India.

How Digital Wallets Work?

Most of the digital wallet services work through apps on smartphone (IOS or Android). Some of these use RFID tagging to accept the payments. While a few have the concept of attaching a PIN for every new transaction.

How do you select your digital wallet?

a)   Look for rules/ restrictions on loading money and utilization/withdrawal on the amount of cash.

b)    The number of partnerships/alliance of digital wallets firm is important point of differentiation.

c)   Look at the free deals and cash back provided by the service providers. More transactions should earn you more loyalty points.

d)   Also, important aspect is to understand the payment security method adopted by the service provider. Although, here the risk is limited to the amount transferred to the wallet.

Our word of caution

There are no dedicated laws on digital payments as on date. With new and growing markets for digital transactions, many fraud and novice entrepreneurs might take plunge in providing this service and with poor business strategies close down soon. The vision of cashless society is surely going to be a reality after half a decade but currently as a newbie consumer we need to take baby steps. Its’ fun to scan code to ride auto rickshaw home, but India is mass ground, we don’t prefer fancy things, we need more useful things.

 List of some of the popular digital wallets:

(click on the image to enlarge it)

Thanks and Regards

Team

Saarthi Financial Planner

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Email: saarthifp@gmail.com