How to Overcome Debt Trap in India: Proven Strategies

How to Overcome Debt Trap in India: A Step-by-Step Guide

Posted on: 18 July 202518 July 2025 by: Aditya Narayanin: Personal Finance1 Comment

How to Overcome Debt Trap in India

The increase in household debt in India, which now accounts for 42% of GDP, indicates that many are facing increasing financial challenges. A debt trap in India often starts with borrowing more as a result of a high-interest loan, credit card due, or borrowing on a lifestyle basis, creating a situation where a person is borrowing money to pay off old loans then borrowing more money to pay off the new loans . To escape the debt trap requires discipline, financial literacy or professional assistance. This article explains actionable items to escape the debt trap, along with useful tips to reclaim your financial future.

Understanding the Debt Trap in India

A debt trap is created when your debt commitments exceed your ability to pay them back, and you have to borrow even more money to meet an existing payment. In India, 32.3% of household debts are unsecured debts (credit cards and personal loans); they are a major cause of debt traps. With sky-high interest rates (upwards of 40% on credit cards) and 8-10 EMI’s, manageable debt can turn into a mountain of debt in no time. The first thing to do is to notice the warning signs, which may include maxed out credit cards, payment EMIs which exceed 40% of income, or borrowing money just to meet everyday expenses.

Step 1: Assess Your Financial Situation

To exit a debt trap, the first step is to analyze your finances. Make a list of all your debts, including the principal amount, interest rates, and monthly EMIs. Include credit cards, personal loans, and home loans. Tally your monthly income and fixed spending such as rent, utilities, and groceries. It will become clearer how much you can allocate toward paying down your debts and identify ways to eliminate unnecessary spending.

Step 2: Create a Strict Budget

Having a balanced budget is essential to avoid a debt trap in India. To have a clearer picture of your finances, label each expense as either a necessity (example: food and rent), semi-necessary (example: subscription service), and unnecessary (example: eating out, and pampering purchases). After this categorization, aim to cut down the semi-necessary and unnecessary expenses. For example, consider eliminating subscriptions that you do not use or using public transportation instead of taking Grab or Taxis. From here, allocate the money saved to your high-interest debt like credit cards (since you are likely paying more than 30% interest). You could even use a tool like a budgeting application to keep track of your expenses more easily.

For more budgeting tips, check out Growthinfy’s guide on Zero-based budgeting (ZBB).

Step 3: Prioritize High-Interest Debts

Some debts carry more weight than others. Prioritize the high-cost debts, whether credit card debt or a personal loan with an interest rate over 15%, since interest is accruing. After higher cost debts have been eliminated, you can use the debt snowball method, which entails paying off your smaller debts first in order to provide quick wins, while the debt avalanche method is for people who want to tackle their high-cost debts first to abound on paying interest. For example, paying off a 36% interest credit card debt of ₹1 lakh is going to provide you more savings and relief than a home loan at 8.5% interest. Do not start off debts with a minimum payment. The minimum payment structure will create a cycle.

Step 4: Explore Debt Consolidation

Debt consolidation helps make loan repayment a little easier by combining multiple loans, and more importantly, debt consolidation allows you to consolidate loans into one, while lowering your rate. In India, there are personal loans for debt consolidation (i.e. banks that offer personal loans including HDFC or IDFC first) which can take around 20-25% off your EMIs. If you had a credit card loan of ₹5 lakh and a personal loan of ₹3 lakh at a rate of 12%, repaying them in two loans is a no-brainer. The monthly payments would be substantially lower if you consolidated the loans into one. Make sure you are comfortable with the new loan, and that you do not incur any new debt while in the repayment of the loan.

Step 5: Negotiate with Lenders

Numerous Indian banks and NBFCs are open to renegotiate terms on loans to facilitate repayment. Reach out to your lender and either extend the loan tenure which will cut down the EMI every month, or negotiate with them for lower interest if you have a positive repayment history. For example, if you extend a ₹10 lakh personal loan from 5 to 7 years of tenure, you can reduce your EMI per month even if you increase total interest. Debt settlement companies like Settle Loan will work on your behalf to negotiate your payments to lower EMIs or settle your payments.

Step 6: Avoid New Debt

A key step to overcome a debt trap is to stop borrowing. Do not take out new loans to pay for EMIs; do not use your credit card to purchase anything that you do not need. Start an emergency fund—aim for a minimum of ₹10,000 and up to 3-6 months of expenses—to avoid it becoming necessary to rely on credit to deal with additional costs that come from emergencies (there may not always be an expense like an unexpected medical scenario). By living within your means you can break the cycle of debt.

For insights on building an emergency fund, visit Growthinfy’s savings strategies.

Step 7: Increase Your Income

Increasing income will help you pay down debt faster. Think about one of these options: freelancing, part-time jobs or at-home teaching. Freelancing, part-time jobs, and online teaching are increasing in popularity in India. For example, if you are an IT professional earning ₹50,000, and you can make an additional ₹10,000 using freelance coding, you can direct that money straight to the debt. If you complete courses on online learning platforms, such as Coursera for example, that expand your skillset and add value to your career, it may potentially increase your salary. And less money stress is a good thing.

Step 8: Seek Professional Help

If you feel overwhelmed with the debt you owe, a financial counselor or debt relief agency can help. Agencies, such as Single Debt or Freed in India, have debt management programs where they consolidate your EMIs into reasonable monthly payments as well as shield you from further harassment from creditors. They can also work on your behalf to settle for a reduced rate. All of this with the help of a modest fee of under $200. Make sure you look out for high-fee services, and make sure to confirm the legitimacy of any debt relief agency using the guidelines created by the Reserve Bank of India or through customer reviews.

Step 9: Build Financial Literacy

When it comes to an ill-informed understanding of finance, we usually become victims to debt traps. So, educate yourself about the terms of loans, interest rates, and your spending habits. You can attend money management skill workshops or learn from an online financial literacy portal such as RBI‘s financial education portal. From good debt (home loans) to bad debt (credit card dues), knowing the difference will allow you to make informed decisions. And if you review your financial plan regularly, you‘ll be able to manage your debt levels accordingly.

Step 10: Stay Disciplined and Patient

Getting out of a debt trap in India takes perseverance; therefore, you should celebrate small successes such as clearing your credit card balance. Recognize that lifestyle inflation can derail your ability to pay down debt rapidly—the last thing you’d want is for your expenses to go up each time your salary increases. Hence, be steady with your minimum monthly payments and utilize whatever income is left over for the purpose of paying down debt rather than increasing how much you spend. If you adopt the right strategy you’ll be able to pay off a ₹10 lakh debt with committed effort applied over 2-3 years.

Common Causes of Debt Traps in India

High-Interest Loans: Personal loans and credit cards above 15% quickly compound debt.
Lifestyle Spending: Loans (₹20-30 lakh) were taken out to pay for weddings or to buy lifestyle products, limiting opportunities for many young Indians. –
Emergencies: Not setting aside $$ for medical emergencies or loss of a job will lead to borrowing.
Multiple Loans: When it is challenging to pay your EMIs, like in the case where EMIs take up more than 50% of their salary, teaching them responsibility with their income and expense profile was most daunting.

Red Flags to Watch For

EMIs exceeding 40% of income.
Maxed-out credit cards or reliance on minimum payments.
Borrowing to pay daily expenses.
Constant financial stress or creditor harassment.

Legal Options as a Last Resort

The Insolvency and Bankruptcy Code (IBC) in India provides a framework for resolution in severe cases. Bankrupting a corporation should be the last option because it affects credit scores. Consult with a legal advisor before going this route, as it will affect your future borrowing for 7 years.

Disclaimer:

Information contained in this article is for informational purposes only. Growthinfy and the author do not accept any liability for any financial decisions made on the basis of this information. Consult a certified financial planner before making any investment or savings choice.

Tax Benefits on Home Loans in India: Save More Today

Posted on: 5 July 20258 July 2025 by: Aditya Narayanin: Direct Tax, Personal Finance1 Comment

Understanding Tax Benefits on Home Loans in India

For many Indians, home ownership is a dream that can be made possible by home loans. In addition to enabling home ownership, home loans can offer substantial tax benefits that can reduce your financial burden. By learning the tax benefits on home loans, you will be able to maximize your savings under the Income Tax Act, 1961. This article will explore the different income tax benefits on home loans available to Indian taxpayers so you can be better informed in your financial decisions.

What Are the Tax Benefits on Home Loans?

Home loans come with two tax benefits, i.e., deduction on principal repayment and deduction on interest paid. The tax benefits will typically be under Sections 80C and24(b) of the Income Tax Act, there is also Section 80EEA which is an additional opportunity. In effect, you can reduce your taxable income in a substantial way using these provisions. Let‘s look at each of them in detail, as well as how to receive the benefits.

Tax Benefits Under Section 80C

You can get a tax deduction under Section 80C for a home loan repayment principal, with a maximum limit of ₹1.5 lakh every financial year, as long as the property is self-occupied or unoccupied. As the deductions under Section 80C also include other investments that qualify for this section, such as PPF, ELSS, life insurance premiums, etc., you should plan your investments carefully, so you do not exceed the limit.

To qualify for exclusions you should own the property under your name and you should not sell or transfer it within five years from the date of possession. If the property is sold within five years of the date of possession any deductions previously claimed are added back to your taxable income. Section 80C can be a great way to reduce your tax liability while repaying your mortgage.

Tax Benefits Under Section 24(b)

Section 24(b) permits you to deduct the amount of interest paid during the year on your home loan. In the case of self-occupied properties, you can claim up to ₹2 lakh in a single financial year. For rented properties, you can claim as much interest as you have received as rent, without any upper limit. If your interest exceeds the rent and you still have not deducted ₹2 lakh, you can carry forward the interest for the next 8 years against rent received.

The only stipulation is that the home loan needs to be taken from a recognised financial institution and the construction or purchase of the property must happen within five years from the end of the previous financial year in which the loan is taken. This is an important benefit for borrowers paying high-interest home loans.

Tax Benefits Under Section 80EEA

Launched to encourage affordable housing, Section 80EEA provides an additional deduction of up to ₹1.5 lakh on interest paid on home loans. This deduction is available for first-time home buyers purchasing a property valued up to ₹45 lakh. The loan has to be sanctioned after April 1, 2019, and before March 31, 2022, and the stamp duty value of the property has to be less than ₹() lakh.

The deduction under Section 80EEA is above and beyond the ₹2 lakh limit in Section 24(b), which means it can be valuable for anyone who qualifies. Be sure to meet the qualifying criteria so you receive the maximum income tax benefit available for home loans.

Tax Benefits for Joint Home Loans

The tax benefits of taking on a home loan will increase when you add a borrower to the title, such as your spouse or parent. Each co-borrower can claim tax rebates on the same deductions – namely Sections 80C (₹1.5 lakh) and 24(b) (₹2 lakh) individually as long as you are co-owners of the property which doubles your tax benefits for the same loan. For example, if you took a loan with your wife or husband as co-borrowers, together you could claim a maximum of ₹3 lakh Section 80C and ₹4 lakh in Section 24(b) tax benefit. So long as the property is co-owned and both married spouses are on the loan and proper documents, you can benefit from this.

Tax Benefits for Under-Construction Properties

The benefits provided by the tax legislation can vary slightly for properties that are under construction. However, you cannot claim any deductions on either the principal or the interest during the construction phase. Once construction is completed, then you can claim the interest paid in respect of the loan taken for the construction in five equal installments in the next five years. Add on to this, you are entitled to a deduction in respect of the normal interest deduction under Section 24(b):

To optimize your tax claim it would be in your best interest to have construction completed within five years of the end of the financial year of which the loan was sanctioned. If five years have passed it may be harder to prove the deductions.

Tax Benefits for Second Home Loans

If you have a second home, the tax advantages/rewards under Section 24(b) are a bit different. For a second property (whether self-occupied or rented) and regardless of whether it’s occupied or rented, you can claim the entire interest (without the ₹2 lakh limit of paid interest actually applicable to self-occupied property). In the case of a second home or property that is self-occupied, it would be treated as a “deemed let-out” property (you may need to declare any notional rental income under the head Income from House Property).

Therefore, the second home loan is quite attractive from an investment point of view because it can be saved against rental income in its entirety. The big tax advantage is to minimize your total tax exposure by claiming the entire interest component of the loan against the rental income. Remember to always consult with a tax professional to ensure compliance with tax updates and timely filings.

Eligibility Criteria for Claiming Tax Benefits

To avail tax benefits on your home loans, you have to fulfill certain conditions:

You have to avail a loan from a registered financial institution, like bank or housing finance company.
The property must be residential and owned by you or a co-applicant.
You have documentation proof, such as loan statements and property documents to support your claims.
For sections 80C and 24(b), the property may be self-occupied or rented, while section 80EEA is only applicable for first time home buyers.

How to Maximize Your Tax Savings

If you want to maximize your income tax benefits from home loan, follow these tips:

Plan your investments: Make sure that your loan principal repayment is counted as part of your total Section 80C deductions, and your current total still falls within the limit of ₹1,50,000.

Choose joint loans: Think about having a co-applicant to get double the tax benefits.

Buy affordable housing: If you can buy affordable housing, make use of Section 80EEA which provides an additional deduction for interest for home loans.
Maintain Documentation: Keep loan statements, interest certificates, and property papers handy for tax filing.

Planning your home loan repayments wisely can help you reduce your tax payments while achieving your goal to become a homeowner.

Common Mistakes to Avoid

Many taxpayers miss out on tax benefits related to the home loan they have taken by making common mistakes:

Fact Check Eligibility: Check that you satisfy the eligibility criteria of the relevant sections before claiming any deduction.
Do not ignore joint ownership: If the property is not registered in both names, you could be missing tax benefits applicable to a joint loan.
Incorrect documentation: Not submitting the appropriate loan certificate or interest certificate when submitting tax returns.
Selling property early: If you sell any property within five years, it can reverse any deduction you have claimed under section 80C.

These mistakes can be easily avoided by getting professional advice from a tax advisor and knowing the relevant taxation laws.

Recent Updates in Tax Laws (2025)

As of July 2025, the tax savings on home loans are largely unchanged under the old regime. However, under the new regime introduced in 2020, no deductions are allowed under Sections 80C, 24(b), or 80EEA. You can relinquish your benefits for lower tax rates under the new regime. Weigh both regimes to determine the one that provides more savings.

All eyes will be on budget announcements, as the government may announce new schemes or tweak existing limits, which will affect homebuyers. Always check with a tax expert or other reliable source for updates.

Conclusion

Tax benefits on home loans in India represent a golden opportunity for tax savings while you repay your loan. By making use of Sections 80C, 24(b) and 80EEA you can reduce some taxable incomes. Whether you are a first-time homebuyer or an investor, understanding these benefits are paramount for financial planning. Always refer to a tax adviser – and make sure that you are compliant and getting the maximum benefit from income tax from the home loan. When done properly, your loan is both a step towards homeownership as well as a tax-saving one.

How to Get Out of Debt Fast: A Step-by-Step Guide

Posted on: 1 July 20251 July 2025 by: Aditya Narayanin: Personal FinanceLeave a reply

How to Get Out of Debt Fast: A Step-by-Step Guide

Managing debt can feel like an incompatible mountain to climb when bills come rolling in and interest rates rise. Many persons in India feel overwhelmed by loans, credit card dues, or simply unanticipated expenses which keep them in a debt trap. This extensive guide on how to get out of debt quickly gives you specific things that you can do to help get your life back on track and out of debt. It can be difficult to pay expensive EMIs or loans taken at high-interest rates, but these tips should help to recover from the debt trap and financial future.

Understand Your Debt Situation

If you want to get out of debt quickly, the first step is to take note of exactly what you owe. Make a list of all your outstanding debts – credit cards, personal loans, home loans, or EMIs. For each of them, note the principal amount, interest rates, and minimum monthly payments. This information will help you clearly see what debts you need to pay first, since it will allow you to pay off the high-interest debts first, as those will be the debts that are costing you the most.

In India, it is not uncommon for the annual interest rates charged on credit cards to exceed 40%. As a result, these debts should be repaid first. Use a spreadsheet to write out your debts or budgeting apps to keep track of your debts. You need to be aware of your financial obligations if you want to escape the cycle of debt.

Create a Realistic Budget

Sound budgeting is essential to understand how your money is being spent and to pay down debt faster. Track your income and expenses every month until you can find areas to cut down expenses. It may be in the form of eating out less or eliminating subscription services—all of which are freeing money to go toward your debt reduction.

In India, household costs like groceries and utilities take a sizable proportion of available disposable funds, and that’s why you need to make sure you are only spending money on the essentials. Use a portion of your income to pay down debt while directing the rest of your income toward your essential spending. You can use the budgeting tips provided on Growthinfy to establish your own sustainable budget that considers key areas for Indian households.

Choose a Debt Repayment Strategy

To pay off debt quickly, we propose you establish a payment framework. There are two widely accepted strategies for paying off debt: the Snowball Method and Avalanche Method:

Snowball Method: First pay off the smallest debt you can while making minimum payments on everyone else. You will quickly build momentum as you clear your many smaller debts first.
Avalanche Method: This method is focused on placing extra payments on the highest interest debt to save money long-term.

In Indian circumstances, the Avalanche Method is more likely to be the best technique to use because of the high cost of credit card interest. Regardless of which one you choose, you must be able to maintain your motivation. Understanding the potential savings is as easy as referring to an online EMI calculator.

Negotiate with Lenders

Don‘t be afraid to reach out to your lenders to negotiate better terms. In India for example banks like SBI or HDFC may provide lower interest rates or an extended repayment term if you tell them your financial hardship, and also consider a balance transfer on credit cards to avoid high interest costs.

For example, if you’re able to transfer a high interest credit card to a credit card with a zero percent introductory period you can save yourself thousands of rupees. After you’ve taken a careful look at your debt situation, reach out and talk with your bank to explore your options in easing a debt trap.

Increase Your Income

Increasing your income may help you to pay off your debt more quickly. In India, there are freelance platforms like Upwork or Fiverr that allow you to earn extra money online. You could also consider a part-time job, tutoring, and even selling unused items online via OLX or Quikr.

So, for example, if you were able to earn ₹10,000 extra every month, this could go directly toward your high-interest debts. Check out Growthinfy’s side hustle ideas for easy ways to increase your income and get out of debt faster.

Cut Unnecessary Expenses

Cutting discretionary spending is a highly effective method to free up money. For example, in India, switching from ordering food from Swiggy or Zomato to cooking at home can save you hundreds of rupees a week. Cancel subscriptions you aren’t using (by the way, Netflix may be a waste, but how about OTT?) and stop shopping impulsively on the e-commerce app you downloaded.

Record your expenses from the last couple of months and take note of any monthly recurring expenditures that aren’t necessary. Eliminate these expenses and apply your savings to the debt repayment plan you created, to eliminate the debt faster.

Consider Debt Consolidation

Debt consolidation involves combining your debt into one loan with a lower interest rate. Personal loans from banks in India, such as ICICI or Axis Bank, typically only charge 10-15% compared to credit cards, which have higher rates. Debt consolidation simplifies the process of repaying your debt and also makes it cheaper since you will be paying less in interest.

Before consolidating your debts, compare the terms of the loan from the bank. You need to double-check that your new EMI can fit into your budget. Debt consolidation can be a way for someone trapped in debt to escape, but bear in mind that you should not take on any new debt while paying off your existing debts.

Build an Emergency Fund

When you are focused on clearing your debt, it is all too easy to want to apply every single rupee to debt repayment. It’s worth remembering that things can pop up you didn’t anticipate like a medical bill that you have to pay. This is why a small emergency fund of roughly ₹10,000-₹20,000 is a good target to help facilitate the very urgent things that you may have to cover.

Try to keep this money in a liquid mutual fund like a money market fund or savings account as you want to have very quick access to this money. Having some type of emergency fund relieves you and prevents you from being tempted to use your credit card, which will help you to stay more motivated to get out of debt quickly.

Avoid New Debt

To avoid falling back into the debt trap, stop taking on new loans or spending on credit cards. Avoid “buy now, pay later“ options from sites like Flipkart, as they can encourage overspending. Use cash or debit cards for regular purchases.

If you have to borrow money, use the lowest-cost options, such as borrowing against fixed deposits, which are cheaper in India. Discipling yourself will continue your success in repaying debt.

Seek Professional Help

If you feel overwhelmed by your debt, a financial advisor or credit counselor may be of assistance. They can also help you develop a repayment plan or negotiate with your creditors on your behalf.

Be careful of fraudulent debt relief schemes that claim to resolve your debt quickly. Make sure you research trusted professionals who can help navigate your way out of debt.

Stay Motivated and Track Progress

Paying off debt is a marathon, not a sprint, so celebrate small wins (like paying off a credit card) to help stay motivated. Using apps like Cred or Paytm will help you keep track of repayments as you go and also show how far you have progressed from the beginning.

Continue to check up on your budget often, and make changes as needed. Consistent success stories on Growthinfy‘s blog covering all aspects of finance and financial freedom should help motivate you to keep going. With patience and flexibility you will one day be able to no longer be part of the debt trap, and conversely be in a financially peaceful space.

Conclusion

To get out of debt fast it takes discipline and planning and a smart approach. You can take back control of your money by understanding what debts you have, budgeting, and making a repayment strategy like the Avalanche or Snowball methods. For our Indian readers, the use of local resources and negotiations with banks or lenders and taking on side hustles are also available. Start today, be consistent, and create a way to stop the debt roller-coaster to enjoy a better financial future.

Disclaimer:

Information contained in this article is for informational purposes only. Growthinfy and the author do not accept any liability for any financial decisions made on the basis of this information. Consult a certified financial planner before making any investment or savings choice.

Top Tax-Saving Investment Options Under Section 80C Top Tax-Saving Investment Options Under Section 80C Top Tax-Saving Investment Options Under Section 80C Top Tax-Saving Investment Options Under Section 80C

Top Tax-Saving Investments Under Section 80C

Posted on: 26 June 202526 June 2025 by: Aditya Narayanin: Direct Tax, Personal Finance1 Comment

Top Tax-Saving Investment Options Under Section 80C

Section 80C of the Income Tax Act, 1961 is a popular provision for Indian taxpayers which provides the benefit of deductions of ₹1.5 lakhs in each financial year when an individual makes some eligible investments or incurs eligible expenditure. By making some clever investment in tax-saving options, individuals or Hindu Undivided Families (HUFs) can reduce their taxable income while creating wealth. This article identifies this list of top tax-saving investment options under Section 80C, specifically written for the Indian audience, so you can plan accordingly for FY 2024-25 (AY 2025-26).

Why Invest Under Section 80C?

Section 80C promotes long-term savings by providing tax deductions for investments in specified instruments. This facility is possible only under the old tax regime, and it will help tax-payers reduce their tax liability while also fulfilling their financial objectives like retirement, education or wealth creation. Choosing the correct option will depend on your risk appetite, time to invest, and liquidity needs.

Top Tax-Saving Investment Options Under Section 80C

1. Equity Linked Savings Scheme (ELSS)

ELSS mutual funds are equity-oriented schemes that come with a 3-year lock-in period, the shortest of all Section 80C options. They present opportunity for high returns (historically after-tax returns have been in the 10-15% range annually). However, due to their equities orientation, these funds also face market risks. ELSS funds are suitable for young investors with a high risk appetite who are looking to invest (SIP) from as few as ₹500.

Tax Benefit: ₹1.5 lakh deduction.
Return: Market linked, no tax long-term capital gains of up to ₹1.25 Lakhs annually to the investor.
Best Suited For: Wealth creation along with tax saving

2. Public Provident Fund (PPF)

The Public Provident Fund (PPF) is a government-backed risk-free investment option that comes with a lock-in period of 15 years, which can be extended in blocks of 5 years thereafter. It provides tax-free interest (7.1% for FY 2024-25) and maturity proceeds, making it EEE (Exempt-Exempt-Exempt). PPF is a good investment option for risk-averse investors who are looking to save in the long term.

Tax Benefit: Deduction on contributions up to ₹1.5 lakh.
Returns: Fixed interest rate with no tax applicable.
Best for: Long term savings and retirement planning.

If you want to dive into how you can make safe investments, check out our blog on Low-Risk Investment Options in India.

3. National Pension System (NPS)

NPS is a voluntary pension scheme that invests in a mixture of equity, corporate bonds and government securities. NPS is beneficial for retirement planning as it qualifies for tax deduction under Section 80C and additionally ₹50,000 deduction under Section 80CCD(1B). It is a useful retirement planning financial product, as NPS has a lock-in till 60 years of age, so until that time, pension funds cannot be withdrawn but under a few specific exemptions partial withdrawals can be made.

Tax Benefits: ₹1.5 lakh under Section 80 C and ₹50,000 under Section 80CCD (1B).
Returns: Market linked returns as well as 8-12% historic average.
Best Suited For: Retirement corpus building.

4. Employee Provident Fund (EPF)

EPF is a mandatory savings plan for salaried workers which is funded by both employers and employees at the rate of 12% of the employee’s basic salary plus dearness allowance. Contributions by the employee to EPF are eligible for a deduction under Section 80C. The interest on the account (currently 8.15%) is also tax exempt if withdrawn after completion of five years of continuous service.

Tax Benefit: Employee Contributions capped at ₹1.5 lakh deductible.
Returns: Fixed interest rate, tax free.
Best For: Salaried earners that want to save for early retirement.

5. Sukanya Samriddhi Yojana (SSY)

SSY is a government scheme specially made for a girl child. It offers the parent / legal guardian tax-free interest (currently 8.2%) and tax-free maturity proceeds. Parents or legal guardians can open an account for a girl child under 10 years of age, which is a lock-in till she reaches 21 years of age, or marries after the age of 18. The ideal investment is for education or marriage.

Tax Benefit: Investment up to ₹1.5 Lakh is deductible
Returns: High tax-free interest
Best For: Saving for a daughter long-term.

6. National Savings Certificate (NSC)

NSC is available from post offices and offers a five-year lock-in as a fixed-income scheme. NSC provides guaranteed returns (currently at 7.7%) while falling in the EEE category for tax benefits. The interest is reinvested and is eligible for Section 80C deductions.

Tax Benefit: investments up to ₹1.5 lakh is deductible.
Returns: Fixed, tax-free interest.
Best For: Conservative investors who are investing for short-term savings.

7.Tax-Saving Fixed Deposits (FDs)

Tax-saving fixed deposit(s) (FDs) available from banks and post offices are subject to a 5-year lock-in and offer guaranteed returns (5.5-7%, depending on the bank). While the principal qualifies for deductions under Section 80C of the Income Tax Act, interest on the FDs are taxed. These investments are suitable for risk-averse investors who want predictable returns.

Tax Benefit: Investments of up to ₹1.5 lakh deductible.
Returns: Fixed, taxable interest.
Best For: Safe and short-term tax savings.

8. Life Insurance Premiums

Premiums paid for life insurance (for you, your spouse, or children) qualify for the Section 80C exemption! Common types of insurance policies which will qualify for this exemption are purchased through IRDAI approved insurance companies. There are numerous options, i.e. term plans, endowment plans, ULIPs etc. When considering the life insurance policies, it would make sense that any maturity proceeds from those policies will be tax-free under Section 10(10D) for you, the insured, only if the total premiums paid for the policy in any year does not exceed 10% of the total sum assured.

Tax Benefit: Up to ₹1.5 lakh deductible on the premiums paid.
Returns: Returns depend on what kind of policy you have purchased; ULIPs provide you with returns linked to the market.

Best For: Insurance and tax saver.

9. Unit Linked Insurance Plans (ULIPs)

ULIPs (Unit Linked Insurance Plans) are unique in that they offer insurance coverage along with the option of investing in equity or debt funds. The premiums paid on ULIPs qualify for deductions under Section 80C of the Income Tax Act and pay-outs from the maturity of the ULIPs are tax exempted under Section 10(10D) for the ULIPs taken prior to 1 February 2021. ULIPs have a 5-year lock-in period and will work for investors that want to have the best of both worlds.

Tax Benefit: Premium paid would be deductible up to ₹1.5 L.
Returns: Market-linked returns have historically been around 8-12%.
Best For:Long-term wealth creation along with life insurance.

10.Home Loan Principal Repayment

Payments towards the principal of a home loan and stamp duty and registration costs, receive the Section 80C deduction. This is only available in the year they are paid so it will be valuable for eligible homebuyers.

Tax Benefit: Principal repayments are deductible up to ₹1.5 lakh.
Return: No direct return – decreases loan liability.
Best For: Homeowners looking for tax assistance.

11.Tuition Fees

The tuition fee paid for the full-time education of up to two children (schools, colleges or universities) in India can qualify for Section 80C deductions. These are the tuition fees exclusively (not donations, development fees or any other non-tuition fees), which is a practical option for parents.

Tax Benefit: Fees are deductible up to ₹1.5 lakh.
Returns: No monetary returns but it supports education.
Best For: Parents with children in school.

Key Considerations for Section 80C Investments

Old Tax Regime v/s New Tax Regime: Deductions under Section 80C are only available under the old tax regime. To be safe, compare both the regimes with an Income Tax Calculator before making a decision.

Lock-in periods: Different options have different lock-in periods, such as ELSS (3 years) and PPF (15 years), which will affect the liquidity.
Risk-vs-return: Consider high return options such as ELSS and NPS in conjunction with low return, low-risk options like PPF and NSC based on your risk appetite.
Plan Early: It is always advisable to investment your amount early in the financial year to avoid a last-minute rush.

Comparison of Section 80C Investment Options

Investment	Lock-in Period	Returns	Risk Level	Tax Benefit
ELSS	3 years	10-15%	High	₹1.5 lakh
PPF	15 years	7.1%	Low	₹1.5 lakh
NPS	Till 60	8-12%	Moderate	₹1.5 lakh + ₹50,000
EPF	Till retirement	8.15%	Low	₹1.5 lakh
SSY	Till 21	8.2%	Low	₹1.5 lakh
NSC	5 years	7.7%	Low	₹1.5 lakh
Tax-Saving FD	5 years	5.5-7%	Low	₹1.5 lakh
Life Insurance	Varies	Varies	Low-Moderate	₹1.5 lakh
ULIP	5 years	8-12%	Moderate	₹1.5 lakh
Home Loan	None	None	None	₹1.5 lakh
Tuition Fees	None	None	None	₹1.5 lakh

Maximising Section 80C Benefits

Maximizing Section 80C:

Create a Portfolio: Create a mix of low-risk investments (like the PPF and the NSC) and high return investments (like an ELSS and an NPS).
Review Your Investments Annually: Modify your investments as your financial position, goals, and market conditions determine.
Claim it at the ITR Filing Stage: If you didn’t submit proof of investment to your employer, claim the deductions while you file your ITR by July 31, 2025.
Seek Expert Help: Get personalized suggestions from financial planners.

Conclusion

Section 80C of the Income Tax Act provides tax-saving investment options that spans all kinds of life circumstances – from ELSS and NPS for wealth creation, to PPF and SSY for safer savings. Get to know the features of each of these options, their lock-in periods, their returns etc. So that you can make informed investments to strategically align your investments with your financial goals and save ₹ 1.5 lakh on taxes. It’s never too early to start thinking for FY 2024-25 tax savings and planning to optimise your tax savings as much as possible for your future.

Top Investment Options in India for 2025: Safe and High-Return Plans

Posted on: 17 June 202517 June 2025 by: Aditya Narayanin: Personal Finance1 Comment

Top Investment Options in India for 2025: Safe and High-Return Plans

Investment in 2025 may play an important role for all Indian investors looking to build wealth for a better financial future as the cost-of-living rises alongside our economic growth. Given that inflation rates continue to hover between 5-6% annually, selecting appropriate investment choices available in India can help create that wealth needed for specific goals that include retirement, higher education, or buying a home. This guide will provide Indian investors with safe money, good, and better investment choices available to them based on their risk profile and financial goals.

Why Invest in 2025?

India’s economy is expected to grow, at least at 6.5- 7% in 2025, a potential bonanza for its investors. With rising expenditures for healthcare, education and shelter, hence, financial plans are paramount. By investing sensibly, couples, families and individuals can selectively invest and achieve their various milestones and challenge the impact of inflation.

Initially take stock of your risk profile, your investment horizon and your aims. Diversification, across asset classes, helps to mitigate risk and enhance returns! Here are some investment plans for 2025.

Safe Investment Options in India

1. Public Provident Fund (PPF)

Public Provident Fund (PPF) is one more example of a government-supported scheme with a guaranteed interest rate of 7.1% (in the year 2025) and the ability to receive tax benefits of the amount contributed under Section 80C (up to ₹1.5 lakh). As one would expect, this scheme has a lock-in period of 15 years, which is suitable for long-term plans such as retirement or children’s education.

This scheme offers steady returns while ensuring safety for the capital amount. Although partial withdrawals are allowed after 7 years, there is still some liquidity; therefore, PPF is for the more conservative investors.

2. Fixed Deposits (FDs)

FDs, provided by banks and post offices, are among the safest investment options in India. They have an interest rate between 6 – 8%, and senior citizens may get 0.5% above these rates. There are tax-saving FDs offering the benefit of Section 80C for 5-years maturity and a lock-in period.

FDs offer predictable returns and a flexible term (7 days to 10 years). But since the interest will be taxable, you may want to know your tax slab before investing in it.

3. National Savings Certificate (NSC)

NSC is a Post Office-run scheme that offers a 7.7% interest rate with a 5-year lock-in period. Tax deductions are available up to ₹1.5 lakh under Section 80C for investments. The investment is ideal for a mid-term saving goal such as a wedding or education costs.
Interest is compounded annually, but it is payable at maturity and the capital is protected. It is also accessible through Post Offices, making it a popular scheme in rural parts of India.

Good Investment Options in India

4. Sovereign Gold Bonds (SGBs)

Gold is both a cultural and financial asset in India. The SGBs from RBI pay 2.5% interest annually, with capital appreciation linked to gold prices. They’re 8 year in duration with maturity exempt from taxes, making them a better investment option in India than physical gold.
Storage costs and risks are not an issue with SGBs. Investors can buy them from the bank or stock exchanges, starting at one gram.

5. Sukanya Samriddhi Yojana (SSY)

SSY promotes the welfare of Girl children through a Government scheme. As per 2025 interest rate, SSY has a rate of interest of 8.2%. SSY has a tenure of 21 years, and the Government also covers tax benefits specified in Section 80C. SSY is a perfect scheme for parents that are planning for education and/or wedding related expenditure.

The minimum investment is ₹250, and you can invest up to ₹1.5 lakh in a given year.

Withdrawals are permitted in part starting at 18 years of age for the girl.

Better Investment Options in India

6. Mutual Funds

Mutual funds can accommodate a wide variety of risk profiles, so they are a solid option for 2025. Equity mutual funds produce approximately 12-15% average returns for those in the highest risk profile and debt funds are suitable for more conservative investors, producing returns of 6-8%. Equity-Linked Savings Scheme (ELSS) is a hybrid mutual fund that doesn’t just provide returns, but (in addition) offers tax savings with a lock-in of only 3 years.

Mutual funds are accessible. They are accessible due to their systematic investment plan (SIP) – a method of investing that starts at ₹500 and is used by millions. Attractive fees (partly due to their professional management) and the ability to diversify are also reasons to perceive mutual funds as a better investment in India.

7. National Pension System (NPS)

NPS is a retirement scheme indexed to the markets, with a possible return of between 9-12% based on the allocation of equity, debt, or hybrid investments. Contributions toward NPS are tax-deductible subject to limits of ₹2 lakh under Sections 80C and 80CCD(1B).
The structure allows investor flexibility to choose asset managers and asset allocation. Partial withdrawals for specific events (education or medical expenses) offer liquidity to the investment, which makes it appropriate for long term wealth creation.

High-Risk, High-Return Options

8. Equity Stocks

When it comes to returns on investment (ROI) stocks have the greatest potential for returns (15 – 20% per annum) but are very volatile. Investing in blue-chip companies or indices (like NIFTY 50) helps mitigate risk.

Due diligence is necessary, especially if the long-term investing period is at least five years or more to avoid fluctuations in the market. Stocks investing is best suited for those with a higher risk tolerance and large increase in ROI.

9. Unit-Linked Insurance Plans (ULIPs)

Unit-linked insurance plans (ULIPs) offer insurance and investment in a single product with market-linked returns and life cover. Equity ULIPs can provide 10-15% returns and come with tax benefits under Section 80C and Section 10(10D).

Given that ULIPs have a 5-year lock-in and incur additional costs (1-2% a year) on top of management fees, it is important to choose your fund carefully. ULIPs are appropriate for investors looking for the benefits of both insurance and wealth creation.

Case Study: A Balanced Approach for Indian Investors

Take the example of Sumit and Sumedha, a young couple from Mumbai, whose combined income is ₹1.5 lakh. They want to save for their home down payment (₹10 lakh in 5 years) and retirement in that same period.

They have a diversified portfolio:

PPF (₹1.5 lakh each annually): The safety aspect; and also tax saving aspects.
Equity Mutual Funds (₹10,000 SIP): aimed at high returns for long time goals.
SGB’s (₹50,000 annually): To hedge against inflation
FD’s (₹2 lakh): Emergency fund for unplanned expenses

This reasonably-opportunistic portfolio pulls effectively against their investments goals, while providing a healthy opportunity for risk-return for them simultaneously.

They have regular reviews with their SEBI-registered advisor to keep their plan on track.

Tips for Choosing the Best Investment Options

1. Assess Risk and Goals

Low-risk investors should opt for PPF, FDs, or SSY. Moderate-risk investors can explore mutual funds or SGBs, while high-risk takers may choose stocks or ULIPs. Align investments with goals like buying a home or funding education.
People who want low-risk investments should consider PPF, FDs, or SSY. Moderate-risk investors can choose mutual funds or SGBs, while those who can tolerate a high-risk may select from stocks, ULIPs. Your investments should always be made in line with your investment objectives, like buying a house or funding an education.

2. Diversify Your Portfolio

Spread your investments across various asset classes to minimize the risk. For example, a good mix can be 40% to Fixed Deposits / PPF, 30% to mutual funds, 20% to SGBs, and 10% to stocks. This is effective in ensuring that you have a good investment stance during market fluctuations.

3. Maximise Tax Benefits

Also, utilize the various tax-saving investment options that are available such as PPF, ELSS, or NPS. If you are married, even though you invest individually you can benefit from tax savings of up to ₹3 lakh, this is available under section 80C of the income tax act. Plan early to avoid the artificial rush for tax-saving instruments at the end of the financial year.

4. Build an Emergency Fund

You should also have 6 to 12 months’ worth of monthly expenses in liquid assets such as savings accounts or liquid mutual funds. If your monthly expense is ₹50,000. You should aim to have at least ₹3-lakh to ₹6-lakh of liquid money available to meet emergencies, loss of work, or medical expenses .

Read our insightful article on Emergency Funds to understand why they’re a crucial part of a solid financial plan.

Common Mistakes to Avoid

Over-Reliance on One Asset: Don’t put all your eggs in one basket with deposits or stocks; diversify.
Ignoring Inflation Risk: Choose investments (like equity funds or SGBs) that will give you a return above inflation (5-6%).
Lack of Research: Be informed about what you’re investing in, especially regarding high-risk investments like stocks.
No emergency fund : Lack of liquidity can disturb your financial plans when events occur.

Conclusion

To choose the best investment options in India in 2025 requires an evaluation of protection of the capital, returns and objectives. In the case of capital protection, you have options like PPF, FDs or SSY and are suited to those that are conservative investors; if you are willing to take on some risk you have options such as mutual funds, NPS or stocks that offer higher returns. In conclusion: diversify your investments, plan for taxes and seek guidance from a SEBI registered advisor to create a solid portfolio. Start investing now to secure your financial future!

Disclaimer:

Information contained in this article is for informational purposes only. Growthinfy and the author do not accept any liability for any financial decisions made on the basis of this information. Consult a certified financial planner before making any investment or savings choice.

How to Manage Finances as a Couple

Posted on: 15 June 202516 June 2025 by: Aditya Narayanin: Personal FinanceLeave a reply

How to Manage Finances as a Couple

Managing money can be fun and hard for couples. Sharing income, expenses, financial obligations and future goals is a lot of communication, trust and an agreed-upon process. In this guide, we will discover the ways couples can manage money while still loving each other and working toward goals. Regardless of how long you’ve been a partner or couple, this guide will help you understand the dos and don’ts of money management as a couple.

Why Managing Finances as a Couple Matters

Money is often cited as one of the biggest stressors in a relationship. Learning to manage money together as a couple, you can strengthen your relationship, figure out the important financial priorities, and build a financially secure future. Relationships are a team sport, so think about money, transparency, respect, partnership.

1.Have Honest Conversations About Money

The first step to managing finances as a couple is communication. Early on in your relationship identify your financial habits, including debt, savings, and goals. Be open about income, spending habits, and any “baggage” (e.g., loans, credit cards, etc.).

Tip: Plan regular “money dates” to continuously go over your finances. These regular meetings can be informal chats over coffee where you talk about your budget, savings plans, and any expenses coming up. Being open and honest about all financial numbers keeps both partners in check and prevents types of surprises, and improves trust.

2.Set Shared Financial Goals

For instance, “Save ₹5 lakhs for a trip in two years” or, “Pay off ₹10 lakhs loan in three years”. Having well defined goals keeps you engaged and focused. For more on setting goals, check out this post on financial planning.

3. Choose a Money Management System

There are several systems couples can choose from to share their resources together. Which approach is best for you will hinge on you as a couple and your incomes and preferences. Here are three options:

Joint account: pool all wages into one account and track all shared expenses from that account. Very similar to how a new family would run their finances if they had just had children or got married. This generally appeals to couples who want 100% transparency of all finances between each other and take equal responsibility for sharing the income and expenses.
Separate accounts: maintain separate finances. Share a proportional or equal portion of a shared expense, like rent or utilities.
Hybrid approach: maintain separate accounts for personal expenses and a joint account for shared expenses and goals.

It is best to develop shared financial goals together, but start with what feels fair to you. For example, if one partner makes substantially more, it might be fair to split the shared expenses using percentages.

4.Create a Joint Budget

To effectively manage finances as a couple, creating a budget is important. Take into account your combined income and amounts of fixed expenses (e.g. rent, utilities) and discretionary spending (dining out, hobbies).

Make sure to factor in savings, debt repayments and fun activities to ensure that there is a balance between being responsible and enjoying life. Review your budget monthly to make any changes in your financial situation (e.g. a pay rise, unexpected expense).

5.Plan for Emergencies

An emergency fund allows you to manage unexpected expenses that occur, such as repairs to your car or medical bills. Aim to have savings equating to 3-6 months of your living expenses into an emergency fund account that is separate from your day-to-day accounts. You can begin your emergency fund accumulation with ₹5000 to 10,000₹ a month and then continue to save until you feel you have sufficient savings put aside for emergencies.
If you are able to set-up an emergency fund, unexpected expenses will not stop you from enjoying your plans. If you both save for emergencies as a couple, you will be able to grow together and not be troubled by life’s surprises together

6.Manage Debt as a Team

When you have debt, it can cause strain in your relationships, especially when it is something other than openly discussed. Pull together all your debts, such as student loans, personal loans, and credit cards, and develop a repayment plan. Identify which debts to repay first by either utilizing the snowball method (paying off your smallest debts first) or the avalanche method (repaying high-interest debts first).
If one partner has substantial debt, have an open and honest discussion about how you’ll approach this together.

7.Respect Individual Spending

Shared goals are significant, but so is individual liberty. Consider agreeing on a “fun money” expense allowance for each partner to spend without the guilt of consuming the shared budget. This helps eliminate resentments formed through shared expenses, while still allowing you both to share your vision and fulfill individual pursuits within your joint financial plan as a couple.

You can agree not to discuss any purchases under. For instance, you both might agree to discuss any purchase made by either partner, above .

8. Plan for the Future

Planning long-term reinforces your financial relationship together. Talk about retirement objectives, your investment portfolio and insurance requirements. Consider contributing to pensions or ISAs to allow your wealth to build and multiply over time. If you are hesitant, have a consultation with an expert for someone to help define a structure based on your long-term needs. For couples interested in investing, check out this blog on investment strategies for couples.

9.Handle Income Disparities

When one partner has a higher income than the other, the potential for imbalance can invoke difficult feelings. When addressing wealth, be open about feeling imbalanced, and focus on contributions instead of competition. For example, you might want to adjust each partner’s expenses based on how much money they make (60/40). You might have the higher income earner cover the rent but allow the lower income earner to pay for smaller bills.

Keep in mind that fairness, not equality, is the target you are aiming for. As long as you both regularly check-in and genuinely feel heard, both partners should feel valued for whatever their contribution is.

10. Seek Professional Help if Needed

If you find yourselves unable to reach agreement regarding finances, you may wish to seek outside assistance. A financial planner can help you both by developing a neutral financial plan, and a financial planner can help if you have emotional money issues. In the UK, there are companies like Relate, who can provide relationship counseling that includes resolving money issues.
If you need help, do not feel embarrassed: it will help to ensure the health of your partnership. It’s an investment in your partnership’s success.

Common problems to Avoid

Don’t keep secrets : Purchasing items or incurring debt without your partner knowing will ruin any trust you have.
Don’t skip discussions about money : If you avoid talking about finances then you may create misunderstandings.
Don’t assume roles : One partner should not take on all the responsibility. Participate together, or at least be aware of what is happening with your finances.

By avoiding these mistakes you’ll build a better financial partnership.

Conclusion

Knowing how to manage your finances as a couple is about cooperation, communication and compromise. Together, through setting mutual goals creating a plan (budget) and by respecting each other’s spending habits, you can create a safe and happy future. For more ideas on money management, check out GrowthInfy.

Disclaimer:

Information contained in this article is for informational purposes only. Growthinfy and the author do not accept any liability for any financial decisions made on the basis of this information. Consult a certified financial planner before making any investment or savings choice.

Zero-Based Budgeting: A New Way to Manage Your Finances

Posted on: 21 May 202518 July 2025 by: Aditya Narayanin: Personal Finance1 Comment

Zero-Based Budgeting: A New Way to Manage Your Finances

Zero-based budgeting (ZBB) is quickly catching on among top financial influencers and financial hacks and it’s easy to see why. Unlike budgets you set where you just adjust last month’s budget, a ZBB isn’t based on another period. Instead, you have to explain every rupee you’re going to spend. This clarification helps you remove waste in your spending and makes sure your money is spent only where it is supposed to be productive. To put it all together, we’ll synthesise the best advice from the most reliable sources and up-and-coming articles, to explain how ZBB works, why it is growing in popularity, and how you can use ZBB to grab complete hold of your finances.

What Makes Zero-Based Budgeting Different?

Whereas traditional budgeting often budgets for progressive changes (add a few rupees here and take a few away there), zero-based budgeting goes to the other extreme and requires that every expense be justified from a zero base, with every penny accounted for and serving a purpose. This is the way you can change your life if you want to get full control of money.

” The simple notion behind a zero-based budget, sometimes called a zero-sum budget, is that every cent must have a purpose. “

Key Benefits (and Why They Matter)

The Important Features of ZBB:

Focused Cost Control: With ZBB, every dollar receives thinking; wasteful expenditure and legacy costs hardly find any opportunity to exist in a conventional budget.
Goal Alignment: Convert every rupee spent into current priorities and financial goals, not into old accumulation.
High Level of Accountability: Be it managing household finances or running a company, if you employ ZBB, it becomes easier to pinpoint who’s accountable for each spending decision and its outcome.
Agility and Flexibility: Starting from zero, you find it easier to fit a budget around changes in your life, new opportunities, or economic uncertainty.
Customizable and Forward Thinking: ZBB can be as simple or detailed as you want and is designed to promote future thinking over ingrained habits.

The Challenges (and How to Overcome Them)

No system is flawless, and the top stories concur on the key obstacles:

Time-Consuming: ZBB requires more effort initially—tracking, classifying, and justifying each expense is time-consuming.
Tough with Variable Income: If income varies, it is hard to budget each rupee, but taking last month’s income as a reference can be helpful.
Hard to Forecast Unforeseen Expenses: Surprises can ruin your plan, but setting aside a separate savings category for surprises can act as a buffer.
Capital Intensive for Organizations: For organizations, ZBB can be controlled by clever managers or give rise to short-termism if not properly managed.

How to Start Zero-Based Budgeting (and Stick With It)

Here’s a practical, step-by-step guide inspired by the best advice from NerdWallet, Indeed, and Oracle:

Know Your Income: Write down everything—salary, side hustles, investments .
Track Your Expenses: Go through past spending to identify trends and savings opportunities.
Categorize and Prioritize: Segment expenses into needs, wants, savings, debt, and emergencies.
Allocate Every Rupee: Ensure income minus expenditure equals zero—each rupee has a purpose.
Review and Revise Monthly: Life gets in the way, so does your budget. Adjust categories and priorities accordingly.

Also Read our insightful article on the Top Investment options in India.

Zero-Based Budgeting vs. Traditional Budgeting

Feature	Zero-Based Budgeting	Traditional Budgeting
Starting Point	Every expense starts at zero	Adjusts previous year’s budget
Expense Justification	Required for all expenses	Only for new/changed expenses
Flexibility	High—adapts to change easily	Lower—may carry over old habits
Time Commitment	High upfront, ongoing review	Lower, but less scrutiny
Accountability	Strong focus on responsibility	Can be diffuse

Why Make the Switch?

Zero-based budgeting isn’t just another financial trend —it’s a proven way to take control, cut waste, and align your spending with what matters most. Whether you’re an individual aiming for financial freedom or a business leader seeking efficiency, ZBB delivers clarity and discipline that traditional budgets often lack.

Ready to give it a try? Start small, be consistent, and watch as your financial confidence grows. Zero-based budgeting is less of a method and more about a paradigm shift that puts you in the driver’s seat of your financial journey.

Disclaimer: Information contained in this article is for informational purposes only. Growthinfy and the author do not accept any liability for any financial decisions made on the basis of this information. Consult a certified financial planner before making any investment or savings choice.

Emergency Fund: Why You Need It and How to Create It

Posted on: 11 May 202515 June 2025 by: Aditya Narayanin: Personal Finance3 Comments

Emergency Fund: Why You Need It and How to Create It

What is an Emergency Fund?

An emergency fund is money that you have set aside for unexpected costs. It is a type of financial buffer. You may use it to cover medical expenses, loss of employment, or emergency repairs.

Why Is an Emergency Fund Essential in India?

In India, most individuals encounter unforeseen expenses. Medical bills, job insecurity, and family crises are usual. Without savings, these incidents can lead to stress and debt.

Let’s understand why an emergency fund is essential:

Increasing medical bills: Hospital bills are rising every year.
Job insecurity: Layoffs and delayed salaries are on the rise.
Natural disasters: Floods and other calamities can destroy homes and possessions.
Family emergencies: You might need to assist parents or family members during crises.

How Much Should You Save?

A decent emergency fund should be equal to 3 to 6 months of expenses. If you are a self-employed person, try for a minimum of 6 months. First, determine your monthly expenses. Include rent, food, bills, and EMIs.

Here’s an example:

Monthly expenses = ₹30,000
Emergency fund goal (6 months) = ₹1,80,000

Don’t worry if you have to start small. The idea is to be consistent.

Where Should You Keep the Emergency Fund?

Keep your emergency fund liquid and secure. Following are good options in India:

Savings Account: Low risk and easy to withdraw.
Fixed Deposits (FDs): Better returns than savings account.
Liquid Mutual Funds: For slightly better returns with instant access.

Avoid investing emergency funds in stocks or long-term schemes.

How to Build Your Emergency Fund Step-by-Step

Step 1: Set a goal

Determine how much you require. Divide it into monthly savings goals.

Step 2: Open a different account

Do not commingle this money with your regular account. Open a separate bank account or FD.

Step 3: Automate savings

Utilize auto-debit to move a fixed amount regularly. It creates a habit.

Step 4: Reduce unnecessary expenses

Stay away from impulse purchases. Small reductions in shopping or dining out make you save quicker.

Step 5: Utilize additional income

Bonuses, tax rebates, or freelance income can increase your fund.

Tips to Keep Your Emergency Fund

Don’t touch it unless you must. This is for emergencies only.
Check on it annually. Adjust your fund level if costs increase.
Replenish after depletion. If you take out, resume savings.

Common Mistakes To Avoid

Investing it in risky investments such as stocks or cryptocurrency.
Applying it towards budgeted expenses such as vacations or shopping.
Not keeping it current as life evolves (marriage, children, etc.).

Final Thoughts

An emergency fund provides peace of mind. In today’s unpredictable world, it insulates you from unexpected shocks. Begin today—even ₹500 a month will make a difference. Create your safety net and remain financially secure.

How to Create a Monthly Budget

Posted on: 9 April 202510 June 2025 by: Aditya Narayanin: Personal FinanceLeave a reply

How to Create a Monthly Budget: A Step-by-Step Guide

Handling money can be , but tough task but knowing how to budget each month is a lifesaver. It’s like providing yourself with a money map—one that makes it easy to save more money, eliminate debt, or just spend with certainty. Whatever your budgeting situation is, whether starting for the first time or improving on it, a carefully done monthly budget is the key to money success. Here in this guide, we will guide you through a straightforward, practical step-by-step process to make a budget that suits your lifestyle and keeps you on track.

Why a Monthly Budget Matters ?

Before we get into the “how,” let’s discuss the “why.” A monthly budget isn’t a list of figures—it’s a tool that gives you clarity and control over your finances. Here’s what it does for you:

Tracks Your Money: Have you ever wondered where your paycheck goes? A budget tells you exactly where each rupee is spent.
Prioritizes Essentials: It makes sure your rent, groceries, and bills are paid before you splurge on extras.
Increases Savings: Saving becomes second nature when you save for it.
Avoids Overspending: End impulse purchases that result in debt.
Creates Stability: Eventually, a budget paves the way for long-term financial stability.

Imagine it’s your own financial assistant—one that assists you in matching your expenditures with your ambitions. Ready to begin? Follow these three clear, actionable steps to create a monthly budget.

Step 1: Define Your Financial Goals

A budget without a purpose is merely a spreadsheet—it’s your goals that make it meaningful. Take a minute to consider what you want your money to do for you. Are you:
Saving ₹10,000 a month for a dream holiday?
Paying off a pesky credit card debt?
Creating an emergency fund for peace of mind?
Investing for the future, such as a child’s education or retirement?

Be specific. Rather than “save money,” try “save ₹5,000 by June for a new laptop.” These goals will determine how you spend your income in the next step. Write them down and leave them out where you can see them—they’re your incentive to stay on track.

Step 2: Make Your Day-To-Day Spending Plan

Now it’s time to make your income do some work.

Split it into three categories according to your needs, wants, and objectives. A common place to start is the 50/30/20 rule:

50% for Needs: Necessities such as rent, food, utilities, and transport. These keep things going.
30% for Wants: Enjoyables such as going out, hobbies, or that brand new shoe. This makes your budget fun.
20% for Savings and Debt: Money for your goals—whether it’s savings, investments, or extra payments on loans.

Example: If your monthly income is ₹50,000:

Needs: ₹25,000
Wants: ₹15,000
Savings/Debt: ₹10,000

Customize It: The 50/30/20 split is flexible. If rent takes 60% of your income, adjust by cutting wants or increasing savings later. Assign every rupee a job—leaving money unallocated often leads to overspending. Use a table or app to map it out clearly.

Step 3: Monitor and Make Adjustments on a Regular Basis

A budget is not a “set it and forget it” situation—it’s a living document that requires attention. Monitor weekly to determine how you’re doing. Did you spend too much on groceries? Not enough on entertainment? Make adjustments accordingly.

Tools to Use: Mint, YNAB (You Need A Budget), or even an Excel spreadsheet can be used to automate tracking.

Monthly Review: At the end of the month, check your plan against reality. Did you meet your savings target? Did unexpected expenses arise? Adjust your categories for the next month.

Stay Balanced: If you splurged in one category (e.g., a wedding), cut elsewhere (perhaps miss eating out).

The trick is consistency. Minor adjustments keep your budget manageable, even when life throws curveballs.

Pro Tips for Sticking to Your Budget

Automate Savings: Set up a standing instruction to transfer money to a savings account right after payday. Out of sight, out of mind.
Leverage Technology: Budgeting apps send alerts when you’re nearing limits—perfect for staying on track.
Start Small: If you’re new to budgeting, don’t aim to save half your income right away. Ease into it with achievable targets.
Reward Yourself: Build in small treats (like a movie night) to avoid feeling deprived.
Stay Flexible: Job changes, emergencies, or celebrations happen—adapt your budget without guilt.

Common Mistakes to Avoid

Even the best budgets can stumble if you’re not careful. Watch out for these traps:

Underestimating Expenses: That ₹200 snack habit adds up. Round up costs to give yourself a buffer.
Forgetting Irregular Costs: A car insurance renewal shouldn’t be a surprise to you—prepare for it every month by putting aside a bit each time.
Setting Unrealistic Limits: Zero entertainment may be doable for a week, but not as a permanent lifestyle. Be realistic.
Skipping Tracking: A budget without accountability is merely a wish list. Review regularly to hold yourself accountable.

Final Thoughts

Learning to make a monthly budget is like learning to navigate your financial vessel. It’s a practice, but after a while, you’ll feel in control—not limited. Begin with these five steps, keep it simple, and be consistent. Each rupee you save today, each debt you whittle away, brings you one step closer to your dreams—whether that’s a worry-free life, a big-ticket purchase, or a secure future. Your budget is more than numbers; it’s the blueprint to making your financial dreams a reality. So, pick up your pen (or phone) and begin today—your wallet will be glad tomorrow.
If you have made it this far then you should be rewarded with bonus tip. Remember, Wealth does not comes from saving expenses, it comes from expanding income streams through skills and business. Budgeting will help in short term but for longer horizons focus on increasing your earning potential.

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How to Overcome Debt Trap in India

Understanding the Debt Trap in India

Step 1: Assess Your Financial Situation

Step 2: Create a Strict Budget

Step 3: Prioritize High-Interest Debts

Step 4: Explore Debt Consolidation

Step 7: Increase Your Income

Step 8: Seek Professional Help

Step 9: Build Financial Literacy

Step 10: Stay Disciplined and Patient

Common Causes of Debt Traps in India

Red Flags to Watch For

Legal Options as a Last Resort

Disclaimer:

Information contained in this article is for informational purposes only. Growthinfy and the author do not accept any liability for any financial decisions made on the basis of this information. Consult a certified financial planner before making any investment or savings choice.

Understanding Tax Benefits on Home Loans in India

What Are the Tax Benefits on Home Loans?

Tax Benefits Under Section 80C

Tax Benefits Under Section 24(b)

Tax Benefits Under Section 80EEA

Tax Benefits for Joint Home Loans

Tax Benefits for Under-Construction Properties

Tax Benefits for Second Home Loans

Eligibility Criteria for Claiming Tax Benefits

How to Maximize Your Tax Savings

Common Mistakes to Avoid

Recent Updates in Tax Laws (2025)

Conclusion

How to Get Out of Debt Fast: A Step-by-Step Guide

Understand Your Debt Situation

Create a Realistic Budget

Choose a Debt Repayment Strategy

Negotiate with Lenders

Increase Your Income

Cut Unnecessary Expenses

Consider Debt Consolidation

Build an Emergency Fund

Avoid New Debt

Seek Professional Help

Stay Motivated and Track Progress

Conclusion

Disclaimer:

Information contained in this article is for informational purposes only. Growthinfy and the author do not accept any liability for any financial decisions made on the basis of this information. Consult a certified financial planner before making any investment or savings choice.

Top Tax-Saving Investment Options Under Section 80C

Why Invest Under Section 80C?

Top Tax-Saving Investment Options Under Section 80C

1. Equity Linked Savings Scheme (ELSS)

2. Public Provident Fund (PPF)

3. National Pension System (NPS)

4. Employee Provident Fund (EPF)

5. Sukanya Samriddhi Yojana (SSY)

6. National Savings Certificate (NSC)

7.Tax-Saving Fixed Deposits (FDs)

8. Life Insurance Premiums

9. Unit Linked Insurance Plans (ULIPs)

10.Home Loan Principal Repayment

11.Tuition Fees

Key Considerations for Section 80C Investments

Comparison of Section 80C Investment Options

Maximising Section 80C Benefits

Conclusion

Top Investment Options in India for 2025: Safe and High-Return Plans

Why Invest in 2025?

Safe Investment Options in India

1. Public Provident Fund (PPF)

2. Fixed Deposits (FDs)

3. National Savings Certificate (NSC)

Good Investment Options in India

4. Sovereign Gold Bonds (SGBs)

5. Sukanya Samriddhi Yojana (SSY)

6. Mutual Funds

7. National Pension System (NPS)

High-Risk, High-Return Options

8. Equity Stocks

9. Unit-Linked Insurance Plans (ULIPs)

Case Study: A Balanced Approach for Indian Investors

Tips for Choosing the Best Investment Options