Wednesday, July 13, 2016

Live below your means: 8 life-changing steps to getting richer everyday

It's hard to gain contentment, especially when you exist in a consumerist-driven and credit-based society we have today. You tend to get lost in all misleading glitters of life and buy instant happiness with borrowed money today and worry tomorrow about your little savings, piling up credit card balances, and anticipated bills.

getting richer

American author and financial advisor Suze Orman once said, "Just because you can afford it doesn't mean you should buy it." Living below your means in a world where "more is more" isn't easy but never impossible. In fact, several successful individuals still kept their frugal lifestyle despite their overwhelming wealth.

Change doesn't take place overnight. You have to embrace it and apply it in your everyday life. If you have decided to live below your means, these eight steps may take you forward.

1. Keep your home modest

It is normal for working adults to aspire for a large, grandiose mansion after a few years of hard labor. However, if the process of having the house of your dreams makes you suffer in a financial crisis and kills that little amount of contentment and happiness in you, then the home is not worth the investment.

The best example here is the house of Warren Buffett. This man has a net worth of 63.3 billion and is considered as the most successful investor in the world. But despite his wealth, he still chooses to live in his modest home in Omaha, Nebraska, which he purchased for just $31,500 over 50 years ago.

2. Stop your demand for luxury items

Two dresses. Same color. Same fitting. Same level of comfort. But the price of the other is $1000 since it was made by a famous brand while the other one costs $25 since it was bought off the rack. At the end of the day, no one can tell the difference.

Instead of placing a huge emphasis on possessing luxury items, spend your money on other things that matter. Some billionaires including Ingvar Kamprad, founder of IKEA and John Caudwell, founder of Phones 4U, wearing off the rack clothes instead of spending their wealth on designer clothes.

3. Ditch your car and take the public transportation

Fuel and car maintenance costs are culprits to frugal living. Not to mention those unexpected mishaps which often cause you to break your piggy bank to pay for repairs. To lessen these car-related costs, it might be a wiser choice to ride public transportation every once in a while. With cheap fares, opportunity to exercise, and zero expense on fuel, what more can you ask for?

Taking public transportation has nothing to do with looking underprivileged. In fact, some people with impressive net values such as Chuck Feeney, David Cheriton, and actor Keanu Reeves often get from point A to point B without the use of cars. These thrifty gentlemen could have used their helicopters in traveling but chose to walk, bike, or use public transportation.

4. Say "no" to vices

The more you consume vices, the more they consume you. Vices like gambling, smoking, and drinking might be gratifying at first but they can take your income down to the drain. For instance, an average smoker spends $6 per day for a single pack of cigarettes. That would be $42.00 per week, $180.00 per month, and $2,190.00 per year.

Aside from making you waste your money once you got addicted, these vices also pose some serious medical problems that might leave you drowning from medical expenses in the future. Smoking burns the heart and lungs. Alcohol poisons the liver. Gambling corrupts the brain.

5. Take the “easy way” mentality out of your system

Laziness - most of us is guilty of this. Just think about all the expenses paid for valet parking when you could've parked the car yourself, or those not-so-healthy fast food meals you purchased when you were too lazy to cook, or those shipping fees you chose to pay to have your package delivered. All these costs, whether big or little, harm your savings.

Instead of purchasing food outside, why not prepare your own meals? Budget not only your money but your time as well. Take time in doing your day-to-day activities without relying on the convenient yet costly options. You'll be surprised at how much you have saved at the end of the day.

6. Always aim for discounts and free stuff

Every time you shop, always hunt for a better deal. Compare prices. Wait for bargains. Collect coupons. Every penny, no matter how small that is, can help with your savings when skimping becomes a habit.

Some wealthy celebrities are still lovers of discounts and free stuff despite their net worth. For instance, Jennifer Lawrence still hunts bargains at the supermarket. Lady Gaga is still an avid fan of coupons. Tyra Banks claims to stock up on free hotel shower caps, soaps, and shampoos to use at home.

7. Don't let yourself fall into the pit of consumerism

In living frugally, settling for less is something to be proud of. Warren Buffet once said, "If you buy the things you don't need, soon you will have to sell the things you need." With this, it is important that you can defeat the tempting whispers of consumerism and manage your finances.

To help yourself curb your consumerism, plan ahead on where you put your money. Distinguish "necessities" from "wants." As much as possible, minimize your intake of advertisements. Limit your mall visits. Avoid spending much money on simple hangouts.  Use cash instead of credit or debit cards. Try to find other ways that can make you happy without the use of money.

8. Redefine your definition of wealth

The main reason why some of us live beyond our means is we have no clear definition of what "being rich" is. Some merge wealth and success with the capability of possessing luxurious items or having several companies and assets.

The truth is behind the faces of these prominent individuals, is that unending pursuit of happiness. What's common among them? Most of them are living frugally despite their enormous net worth. Some of them even downsized their homes and possessions.

Why? Because wealth cannot be measured by the things you see. it has nothing to do with the size of the house you own or the price of the clothes you wear. It's about finding what will make you contented.

Author Bio:

Like other young adults, Carmina Natividad also experiences struggles in saving money, yet she finds a way to become a responsible spender. She shares her views on money issues by being a daytime writer for Speedy Money Payday Loans, an Australian-based business, providing short-term borrowing solutions.

What You Need to Know About Income-Tax Notices and How to Avoid Them

It is not uncommon to be served with income tax notice from the Income Tax Department. Most tax notices alert recipients on issues that need to be addressed or corrected immediately. The tax notice should never be ignored because the tax department can impose fines of up to Rs 10,000 for failure to respond to its notices among other repercussions. The number of people receiving income tax notices has increased in recent times due to a number of reasons, including improved tax monitoring as a result of stricter customer identification procedures and fast and efficient online tax filing. This development led to a reduction in the in omissions of high value transactions, income nondisclosure and defective fillings. Below is a list of 8 common reasons why people get income tax notices and how to avoid them:

Income-Tax Notices

1. Tax return reminders

Individuals who have not filed their tax returns can expect a reminder from the Income Tax Department. The notices can cover up to 6 previous years. It is instructive to note that the Income Tax Department can levy a penalty of Rs 5,000 or more for delays. If you have been served with such a reminder, but are not required to file a return, make sure you clear the issue with the tax department.

2. Mistakes in the TDS amount 

Cases of having a mismatch in Tax Deducted at Source (TDS) can easily occur if your employer or deductor delays in filing their TDS returns or have gone on to file incorrect returns. If you receive a TDS notice, ask your employer or deductor to review the TDS amount credited to your name to keep it in good standing.

3. Discrepancy in Tax returns 

The tax department is also likely to send you a tax notice, if there is a discrepancy in your returns. The discrepancy can arise as a result of giving incomplete information or claiming an income deduction under the wrong section. You can correct this problem by reviewing your returns and making the necessary amends.

4. Non-disclosure assets 

The law mandates taxpayers to remit wealth tax on their assets, if the value is over Rs 30 lakh. The department has set the wealth tax at 1% on values above the Rs 20 lakh limit. Always disclose your assets and pay your taxes in good time to avoid getting non-disclosure notices in the future.

5. Investments made under the family name

It has become a tradition for most family members to make investments or purchase assets using their family or family member’s name. Unfortunately, most people who do so are driven by the motive to evade taxes. The incomes that come from these extra investments will attract taxes under the assigned member’s name. If these incomes are not declared during filing, they will attract the attention of the taxman. Whenever you receive such a notice, make it a point to declare your income and ensure corrections are made before submission.

6. Documentation review

Documents are not usually requested when filing the file returns because the Income Tax Department expects you to enter the right information. However, once in a while, the tax department will review your documents to ascertain the basis of its submission. When you are called upon by the tax department to do so, submit your documents promptly as requested.

7. Reporting of high value transactions

High value transactions such as bank cash deposits of over Rs 10 lakh; purchases of over Rs 30 lakh and mutual funds over Rs 2 lakh need to be reported to the Income Tax Department as required by law. The list also includes credit card purchases that exceed 2 lakh and other stipulated spending.

8. Random scrutiny

In its new strategy to enforce tax compliance among the Indian populace, the Income Tax Department has started performing random scrutiny of tax returns. If you are a recipient of this type of notice, you need to first check its validity and respond accordingly without delay.

Tax Assistance

When you get a tax notice, avoid panic and oblige with the demands of the taxman as requested, because failure on your part can cost you a lot of money and deprive you of peace of mind. You may also risk imprisonment in certain cases. Uptra Consultancy Services is a leading accounting firm based in Chennai. The firm has a team of dedicated professionals, including chartered accountants, auditors and lawyers who are ready to help you file your returns and keep your books safe and up-to-date. 

Author Bio : 

Anand Rajendran is a freelance writer living in Chennai, India. His interest in personal finance and budgeting began when he was earning an MFA in theater, living in one of the most expensive cities in the country (Chennai, TN) on a student's budget. Today, he writes for a number of websites and keeps up his own Tax Consultancy Services named Uptra