Whether Demonetization was able to do the needful or it failed in its purpose, is a separate question altogether. Amidst the high profile debates propounded by the Democratic league, we the common man, have our own set of experiences and memories, good and bad, associated with NoteBandi. This chaotic phase has delivered many financial lessons for the common Indian man. So, this article focuses on what did we learn during this one year, and how the lessons can be helpful in managing our finances better.
Don’t keep cash at home: The biggest lesson that Demonetization has taught us is ‘Do no hoard Cash’. Money lying idle in your cupboards can have serious repercussions like:
- The cash is vulnerable to being stolen.
- The money is gradually diminishing in value. The termite, inflation is slowly nipping it away inch by inch.
Why do you want to handle so much cash after all? If you already had cash in your banks, there was no need to affix yourself to the queue, anterior to the banks on 9th November 2016 and onwards.
And this is applicable to both households as well as businessmen. The latter who deal in cash are also subject to the above side effects.
So, the first step of action is if you still have cash lying at your places, go and deposit the same in your bank account.
Secondly, invest that cash, apart from a little emergency money for your near term cash requirements, so as to shield your money from the inflation attack.
Digitization: Another wind of change that Demonetization has brought in the way we live is the embracement of technology. And the scale at which it has made it’s way into our lives is noteworthy. Post the NoteBandi, people were not left with an option but to use digital means for their everyday transactions. Such was the plight that even the sabjiwala’s and the small grocery stores, started accepting payments through digital wallets and got their own card machines. Although the cashless phase has passed, yet their machines and wallet codes are in tact and the number of transactions are on the increase.
Demonetization has broken many apprehensions related to Digitization, people who didn’t even have a debit card now use wallets and UPI App for buying groceries.
It was witnessed that those who were comfortable with technology a year ago, were better off than those to whom technology was alien. Furthermore, we should start adopting technology:
- For our own good, because of the unmatched convenience and safety it offers.
- And, the government’s intentions with respect to its penetration are clear, so the future will be majorly digital, so the sooner we adopt technology, the better it will be.
Tax Planning: Post Demonetization, those who had huge chunks of unreported income, suffered dire consequences. Those who deposited more than Rs 2 Lacs in their accounts had to report this deposit separately in their tax returns. Those who fumbled in filing returns previously found themselves in a hapless situation. There were series of scrutinies and raids conducted in people’s homes and offices for not contributing their share to the economy. On the whole, Demonetization clearly conveyed the message, Be honest and file your returns in time.
And why should you evade taxes, when there are multiple methods to legally avoid them. Consult your advisor and invest in a range of products which can help you save a lot of taxes.
So, the above were the lessons which we can learn from the ripples created post Demonetization. Effective implementation of these learnings into our finances can make our lives easier in the long run.