Navigating the recession and tough times
Let us not make any mistake -- the recession is for real, and it is a global recession. There is absolutely no chance for escaping from this recession, which shows no signs of abating. The signals are also loud and clear.
There is a very suppressed demand in most manufacturing sectors and in the service sectors. Even the best of corporate organizations are wondering how to tackle this single most contributor to recession -- lack of demand, as such.
Be that as it may, each and every Indian needs to know how to combat the recession and the tough times. Though most of this is sheer common sense and proper planning, we refuse to understand realities and take things for granted or "just like that". This leads to total confusion, and by the time one starts planning, one's life is finished.
SAVE FOR THE TOUGH TIMES
Irrespective of on'es income and expenses, it is but essential that we set apart at least a small amount towards expenses, most of which is a tall order, when we get old. Hence, the most important expense, that is, medical expenses, should be totally taken care, when we start ageing.
But even when we are employed, it is but essential that we have proper medical insurance. There is one simple way of managing this. Start a small recurring deposit, even less than rupees one hundred, with banks like the Indian Overseas Bank, where they accept small amounts. For instance, Rs.60 set aside every month, will still fetch, a huge amount at the end of seven years, and this will suffice to pay the medical insurance amount.
This safety net is very essential.
Now, the essentials. Though the cost of vegetables is very high, one can switch to greens which is available at fairly cheap prices. One can also think of a small garden, particularly roof garden, so that one can grow vegetables and have the satisfaction of eating fresh vegetables, and also save cost in the bargain. Reducing small expenses here and there, will mean a great deal. These small amounts saved every month in recurring deposits, will help us a great deal, when we are old, or get into late forties or even older.
Similarly, it is really amazing that parents in cities like Chennai, do not hesitate to pay up to rupees one and half lakh rupees, to secure an admission in the LKG class for their child. This is absolutely atrocious and can mean so much for the middle class family's net worth, even if the man earns more than one hundred thousand rupees every month.
This dangerous practice should be avoided and should be put an end too. Parents can afford to put their children in the friendly neighborhood play school, as a huge amount of research has revealed that it is wise to put a child before the fifth standard in a methodology where the child learns at his or her own pace. Play is the best method possible, and this will in fact, induce a huge amount of creativity in the child.
AVAIL ALL THE BENEFITS OF TAX EXEMPTED SCHEMES
The Public Provident Fund is the best vehicle for good growth. The PPF is totally tax exempt, at the time of withdrawal. One needs to save just one thousand every year, to maintain the PPF account live. One can also pump in any amount, at any point in time, and this scheme normally earns around eight per cent, and when compounded, the total amount is fairly good, by any means. It is a superb scheme, and can be extended even when the fifteen years are over. Similarly, investments in mutual funds are also non--taxable, and it is wise to invest in some good fund, with the help and professional expertise of a trained investment consultant.
REDUCE ALL EXPENSES THAT HAVE SCOPE FOR REDUCTION
Am a pure vegetarian, but am told that the cost of cooking a good non-vegetarian meal for four people, particularly when it is made of mutton, is around seven hundred rupees. If there are other guests, it would go to upwards of one thousand rupees. So, four thousand rupees gets burned, and all those who consume the meal, are happy, but add a huge amount of fat, every month, as the expense is not only four thousand rupees, but the spices only spoil the health of every single person.
These are the kind of expenses that could -- and should -- be reduced. For instance, there is another angle to the whole thing. The non-vegetarian food accumulates the taste buds of people, and it is literally impossible to give up such bad habits.
Every single rupee saved, is a rupee earned, in these tough times. Similarly, we also have other occasions where we can save money. Many families take out their cars to go to temples or on tours to hill stations, at enormous expense. This can be easily reduced, if such families can go by train, which is much cheaper and very safe --- far more safer than travel by road, which is dangerous, to say the least.
So, one has to make small sacrifices to save the smallest accounts. For those who are well off, it is wise to reduce too much of conspicuous consumption, particularly the huge amount of junk food consumption, on weekends.
The children also needed to be educated about the value for money. Once they understand that the world is not going to be the same again, and that they need to understand the wider realities of life, the children will also realize the need for restraint on several matters, more so, if they are more than fifteen years old.
No greater advise can be given to children, than by walking the talk. Once the parents themselves start reducing expenses, the children will also play ball, with good results.
PICK UP NEW SKILLS
A middle class family with two children were wondering how to make both ends meet. Things were really difficult when the man learned that he would not get any increment, because the company was not doing well.
A friend suggested that his wife enroll in a local cooking class. This changed the entire savings of the family. The enterprising lady learned the tricks of the trade, and started a small hotel in the neighborhood. She tried different dishes and offered some variety.
Within six months, she was able to bring home a neat profit of over fifteen thousand from her business. This is the trigger that we all need -- we need to do things right and the rest will follow.
Tough times demand that we are tough ourselves. Once we are tough, we can successfully navigate the tough times, quite easily.
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