We learn a lot from our mothers. Empathy, kindness, cooking hacks, and family management skills are all gifts our ‘ammas’ give us. But this is not all! Many studies have substantiated that children often learn their first ‘money management’ lessons from mothers. After all, who better to teach you the value of money than the person almost often tasked with making ends meet?
Whether homemakers or career women, women have historically lifted the mantle of being money managers, too. But as the financial ecosystem changes rapidly, our mums, too, could do with a little help from experts. So, this Mother’s Day, let us talk about some handy tax-saving tips that would help mommagers around the country be even better at their (unofficial) jobs!
1. Claim your child’s tuition fees in your tax returns
Mothers who are paying for their kids education can claim this expense in their tax returns. Remember, only the tuition fee component is eligible for deduction under section 80C, which has a maximum limit of Rs 1.5 lakh, and for a maximum of two children. Note that this does not include fees for transportation, extra-curricular activities or donations.
2. Invest for your child’s future
There are many schemes that you can invest in on behalf of your children. The Post Office Savings Income Scheme and the Sukanya Samriddhi Yojana are a few examples. The gains from these investments can be utilised for tax-exempt investments like PPF. ELSS can also generate high returns, despite the 10% LTCG tax on investments for more than one year.
3. Buy an insurance (child plan) for your ward
Perhaps you have already bought an insurance plan for the entire family. But you can still consider buying a ULIP (Unit-Linked Investment Plan) that would work as both investment as well as an insurance. Equity-linked investments are known to provide high long-term returns and are, therefore, the ideal investment vehicle for your child’s future.
4. Create an emergency fund
With children around, the Murphy’s Law usually comes into full effect and anything and everything that can go topsy-turvy, mostly does. The unwritten law of motherhood is – always be ready for the unexpected! And you need the same attitude with money as well.
The ideal savings fund should have enough to last you (and your family) a minimum of 3 months. To fight temptation keep the money parked in a place, where you cannot access it easily, but with added financial benefits. An RD or liquid fund would be a good tool for this purpose.
5. No matter how little, save and continue to save
Juggling regular family expenses and battling inflation often means little to no savings for many middle class Indian households. However, investment needn’t always be in big amount. In fact, there are quite a few mutual fund plans and savings schemes that allow initial investments as small as Rs 500. Start with these right away and see your savings grow in a few years!
6. Learn to say NO to your child
Pandering to children’s whims and fancies without a thought to your income is not prudent. Yes, it is OK to say no to your child. They will not hate you for denying them a PlayStation. Well, not for long, we hope! Instead of being impulsive, teach your kids about the value of saving and creating wealth for the future.
Above all, remember to be disciplined with your finances and keep a check on your splurges. These tips can easily result in lower your taxes and generating high returns, but only if you are willing to follow them. What’s motherhood without a few sacrifices, eh?
We hope you find these tips helpful. Happy Mother’s Day and have a tax-efficient year ahead!
(By Archit Gupta. The author is Founder & CEO, ClearTax.in)