Although the debate over demonetisation hasn’t really settled even a year after it came into force, much can be learnt from it in terms of personal finance. Let’s take a look at them here.
A year ago in November, life changed over a couple of days for millions of Indians. In the wake of the demonetisation announcement, people made hurried visits to the bank to exchange wads of cash that were suddenly made redundant with newly introduced notes, and stood in serpentine queues before ATMs for a way out of their cash-strapped situation.
While the true impact of demonetisation may still be open to debate, much can be learnt from it, especially from a personal finance point of view.
Additional Reading: Demonetisation For Dummies: A Safety Guide To Cashless And Online Transactions
Here’s how demonetisation could help us become more prudent with our money even a year after it came into effect.
Trash the cash and start investing
While you may still need cash to take care of certain expenses since some merchants have yet to transition to digital payments, try and keep only the minimum amount required.
While cash offers great liquidity and flexibility, there’s no wisdom in keeping your cash lying idle in your locker at home. Your money will never grow this way. Invest in instruments like Mutual Funds, Fixed Deposits or Public Provident Fund. Some of these can also help you save on tax and grow your wealth for the future.
Additional reading: Ask The Right Questions Before Investing
Digital is way to go
Demonetisation saw an incredible surge in mobile wallet subscriptions and digital payments. While the switchover to digital transactions was more tedious for those who depended heavily on cash for their daily transactions, those who had already warmed up to mobile wallets and e-payment options didn’t feel the after effects of demonetisation as much as their counterparts.
With the government’s push for a digital economy, the number and volume of digital transactions will only keep increasing over the coming months. So, if you haven’t already made the switch, now would be a good time to start. After all, mobile wallets are a great way of keeping track of your daily expenses as opposed to cash transactions.
Additional reading: How To Use Digital Wallets Effectively For Online Transactions?
Say yes to plastic
Carrying around bundles of cash in your pockets is not only cumbersome, but also fairly unsafe. Debit or Credit Cards can be great plastic mates.
You can take advantage of exciting offers and rewards all through the year like cashback, discounts, air miles etc. A Credit or a Debit Card could prove to be extremely beneficial as long as you follow a few golden rules like making timely payments and keeping a lid on your expenses so you don’t fall into a debt trap.
Additional reading: Why Credit Cards Mean Financial Freedom?
Don’t axe your taxes
During demonetisation, cash deposits over Rs. 2 lakhs had to be disclosed while filing Income Tax Returns (ITR). Accounts with cash deposits exceeding this limit came under the IT scanner. And account holders were even served notices to explain these high-value deposits.
To avoid these incidents from happening to you, disclose your income correctly. And don’t attempt to evade taxes or withhold your income. Consider making tax-friendly investments like ELSS, PPF, tax-saving Fixed Deposits etc.
Additional reading: 5 Tax Saving Options For You
Keep a lid on your expenses
With the cash crunch that followed in the wake of demonetisation, as well as the various caps on ATM/bank withdrawals, demonetisation taught us to manage and budget our finances to deal with our expenses.
For many, this was certainly a first, since people often tend to overshoot their budgets whenever cash is within arm’s reach. Remember, keeping a lid on your spending and following a budget for big purchases will result in significant life-savings.
In fact, to do all this, you don’t need to venture too far. Our very own BankBazaar mobile app is just what you need to help track all your expenses, get quick financial tips and information on the go and track your loan and Credit Card applications.
Additional reading: 12 Insanely Simple Hacks To Cut Down Your Expenses
In line with the government’s resolve on moving towards a cashless economy, we keep pushing the envelope by digitising everything finance related. This helps us bring the larger Indian population into the fold of financial services.
For those not in the know, we are India’s first multi-brand, paperless platform where individuals can compare, review and buy a host of financial products, make paperless applications on Personal Loans and Credit Cards and get quick and easy approvals.
Are you ready to go the paperless and cashless way? Give us a try.