Debt Reduction

The legal age to start earning money is 14 in India, with a condition that the student cannot work during school hours. One can start earning money online, through internships and/or via freelancing jobs.
Ideally, people start their employment in their early 20s. Before that, pocket money can be saved to understand money management. A tip-over saving your money: Saving what is left after spending may bring in jumps, however, savings first and setting a goal on expenses can be helpful.
Credit report in India is generated by several Credit Information Companies (CICs and third party companies). The name of the report generated is CIBIL - Credit Information Bureau of India Limited.
The credit report consists of your payment history of 3 years before it has been issued. Added information like citizenship proof, contact information, employment information, account details, and inquiry application is asked for generating this report. This score is ranged from 300 to 900, and a score above 750, explains that money management is great. Once the credit score is above 750, the chances of you getting a loan from a bank also rise.
There are several ways to improve your credit score. Listed below are some of the proven solutions: • Paying bills on time, • Clearing debt and opting for a longer tenor after taking a loan, • Maintaining older credit cards, • Customize credit limits, • Avoiding too much debt at once, • Creating credit history by allowing different forms of credit.
Debt Management Plans or DMPs are a type of debt repayment scheme which are set up by credit counselling agencies. They offer and educate people, on how to manage better in terms of finance. The goal of a DMP is to have your debt fully repaid within a period.
Yes, very much. This is beneficial for the people who try paying off their debt, but the bank balance never seems to adjust according to their needs. With a DMP you can allow yourself to manage and pay off the debt within a shorter period. Along with the professional advice, the counsellor manages all the calls and bargains on excessive fees, helping you to assess down your debt with fewer fees.
Debt consolidation is the act that refers to take more loan, in order to pay off other debt and liabilities.
Debt settlement is a service offered by debt relief companies to reduce your debt by negotiating settlements with your lenders. There are chances that you can fall into more debt, so beware of that by looking into the fee structure of your agency.
Debt reduction is the process of reducing your debt by the general idea of a financial approach. It can also be explained as the process of paying back a part of the debt.
Insolvency is a state of financial distress when a person is unable to pay off their debt and is no longer able to meet their financial needs. This situation can also arise for companies because of their poor cash flow. Insolvency may also lead to the debt trap
Financial distress occurs when the inflow of income is not able to meet the outflow of the expenses or loans.

Insurances

According to Economic Times, India, ‘Underwriters Thumb Rule,’ life insurance need is a multiple of annual income depending on the age. As an indicative rule, for instance, individuals between 20 and 30 years of age should have life insurance worth 15 times their annual income, while those above 56 years of age can have 6 times their annual income.
A life insurance plan entitles the bearer to a pre-decided maturity benefit mentioned in the policies. Therefore, if they survive the term, they are applicable to receive a specific maturity benefit. On the other hand, a term insurance plan is a life insurance plan but with a fixed time, called the term. Once a person opts to take a term insurance plan, the bearer is insured for the term. During that period, if the person is no more, the main corpus (sum assured) is paid by the insurer to the bearer’s nominee. However, no claim can be made if the person survives the term.
It depends upon the type of insurance that you have, below are two points covered to know about your tax benefits: • Life insurance premium of up to ₹1.5 lakh can be claimed as a tax-saving deduction under Section 80C. • Medical insurance premium of up to ₹25,000 for yourself and your family and ₹25,000 for your parents can be claimed as a tax-saving deduction.

Emergency Funds

Emergency funds are very different from a savings account concerning their purpose. Emergency funds should be liquid and very easily accessible. While a savings account does not keep pace with inflation, it is for the long term “saving the money” purpose. In India, the two funds can be blended by storage. This translates that, an emergency fund can be stored in a savings account.
Emergency funds can be used in the case of: -Losing out on income. -Medical emergency -Family emergency -Housing emergency -Last minute travel
The budget of an emergency fund may vary from person to person and different lifestyles that a person chooses to live. However, a critical point to stick to is to pick up a realistic number that can cover your expenses for 6 months at the least. Filter this fund from your monthly income that won’t stress you out and, also you find yourself making easy cuts in your daily expenses.
In India, there is no specific type of accounts that hold Emergency funds. Because of this, the money can be put into a savings account or even mutual funds, as both the solutions are easily accessible in case of an emergency and liquid too.
There are situations where using a credit card might not be a bad solution, but it can only be considered if you are ready to pay off your debt by the due. And if the former one is true, it may lead to a great credit score, which can benefit you with taxes.