If we speak about a simple, household, salaried person, we can have a better idea about hassle they have to take in managing their salary so that they can have a sufficient amount of money in their pocket at the end of the month hits them. Managing some savings is a great deal in such cases. In such situations, saving some money is a big deal.

An average Pakistani job holder is earning from PKR 30-50 thousand per month. This amount is obviously a handsome one for the intermediate level jobber in Pakistan. But the most common problem faced by this group of youngsters in their expenses. And most of them encounter it as they arrive at the second half of each month.

Here are some basic level tricks to keep your spending in your control and predefined budget.

Related Read: How to Manage your Expenses when you get Unemployed in Pakistan

Putting Your Budget in Place:

By budget, we mean to decide and allocate a fixed amount for your basic expenses. For a household person budget will include the average amount they need to spend on monthly grocery, electricity/telephone/internet/gas bills, fuel, fees and other expenses that are necessary to be paid on monthly basis. Apart from this, you must include a fixed amount for medical treatment into your budget.

Once you will enlist and calculate the amount you needed for these activities, you will be done with your budget. Once you will get your salary, take that calculated amount aside and make sure you are not spending it anywhere else.

Just waiting for the salary to get credited to make your saving for the month ahead is not enough. You need to make yourself a clear concise and strict, yet practical budget plan that need to stick beforehand.

You can consider the revision of your plan, every three months. There are chances your budget will change, you need to add new expenses, the fees for kids are increased or there are some additional medical expenses.

In budgeting, you also need to make sure that you are strict to the basic expenses and savings before you look for some party and outing activities. If you are left with some amount from budget or savings, you can think of other things like shopping or hanging out with friends.

Budgeting helps us to control the most common problem that we face overspending. Overspending is also found to be a major problem that keeps our bank numbers at their lowest by the end of each month.

Use Credit Card Wisely:

Simply keep them to a minimum. We believe that you are one of those youngsters who would like to keep a balance on their credit card. If it’s really so, prefer to shop for the card with the lowest interest rate as it will lower your credit card bills.

If you are a full-time job holder and are able to pay your bills by end of each month, financial experts would suggest going for a card that offers a reward program. Different banks offer different packages and facilities on their credit cards. Look for the credit card offer that suits you the best.

Well! In another case, if you fail to maintain this balance, be competent to avoid paying the interest while enjoying the perks. An expert tip for using a card perfectly is that “Never miss the due date of the payment.” If you are paying your credit card dues on time, let’s say by end of each month, you are going great!

Related Read: Which Terms You Need to Learn before Applying for a Credit Card?

One of the major issue that credit card users face is that they spend too much money by using their credit card. The credit card does not mean that you can shop anything you want to.  

Credit card just provides you the opportunity to pay your bills with a bit of delay. Let’s say by end of each month, or the moment you get your salary. Then how is it possible to pay your bills more than you earn???

Your credit cards help you to make some urgent payments at the time when you have less or no amount in your wallet. You can use a decided amount of money from your credit card and then return it back to the bank after some time. But make sure you are spending that much money which you can pay back to the bank once you will get your salary.

Have credit card to serve you as a helping friend, in the time of need. Having it for your leisure expenses will never be a good idea.

Spend Carefully on Yourself:

This might sound strange but you need to pay yourself for your salary. Managing your personal expenses is also a must if your salary is under PKR 50,000, from which you have to pay your expenses and fulfill needs of your family at the same time.

Setting aside some specific amount for your personal expenses on monthly basis will help you keep the bigger figure aligns and will allow you to make some saving as well.

You must think twice before spending the money on activities like hanging out and random shopping even when you are not much in need of the particular thing and you are buying it just because you liked it, or if you are about to start a new course and you need to pay funds for that.

Stick to your needs, rather than wishing to have everything what you look around you.

The Pro Tip!

Why not make some extra money from the amount you will save!

Focus on the saving plans that offer you the facility to divert your funds towards tax saving, insurance, and investments etc. Look for better and trustable insurance and investment opportunities to double your money with no effort.

Try to have an insurance for you with some basic ongoing investment. You can go for the insurance even if you have a huge amount of savings in your pocket. For the details, you can consult any financial analyst or even your bank might offer you some related opportunities.

Related Read: Smartchoice.pk Introduces New Features with Better User Experience

Keep a money bank saving for emergency purposes. This is always a great idea to cheat you into saving a bit more. At the time when insurance and investment plans are pre-planned financial tools, money banks can bring you some extra unplanned surprises with a very little amount of effort placed in it.

Maybe it looks childish but the idea works a miracle. If you are a salaried person and are worried to meet and manage your expenses, try these simple yet effective rules that will surely earn you some amazing benefits, but only if you apply them on regular basis for a year or so.

Khurram Zahid

The post Money Management Tips for People Income Under PKR 50,000 appeared first on Smartchoice.pk.

Related Read: 5 Tips To Save Money Using Your Credit Card!

DOMESTIC LEVEL SAVINGS

One must start from the lowest level to attain large amounts of yield and so the effort starts from the very basic organization that a salaried person needs to save a considerable amount of money.

1. Eliminate debt

Focus on putting your saved money to paying off debt firstly so that you may later save the money going in debt and use it on your own self.

2. Everyday savings

Try to use less money each day and save up the extras on daily bases. When the daily savings add up at the end of the month, the amount is often considerably large and substantial.

3. Sell things not in use

Appliances, extra cars, computers, books etc. are often kept at houses just for the sake of it, adding up to the money that had been spent on them, going to waste. Sort these unused things out and sell them for as much money as possible to save yourself the resent of spending money on useless items.

4. Make a budget

A salaried person always finds it hard to decide where to spend the limited amount of money that he/she earns. At the end of it all, savings get the lowest importance or no importance at all, to save yourself this trouble, develop a well- organized budget.

5. Set saving goals

While developing a plan for your savings, first decide what are you saving for so that it may become easier for you to divide your money according to the amount you need saved and the time at which you might need the saved money.

Related Read: Credit Card options for Salaried Employees

STAYING IN BUDGET

6. Put aside the savings first and then form the budget

If not put aside in the very beginning, it may get used up and besides the daily savings there would be no other alternative of saved money left.

7. Keep a count of the budget that is spent

To keep a check on whether the budget is being followed or not, count the money used daily.

8. Psychological preparation for self-frugality

This is perhaps most important for an average salaried Pakistani because a lot of psychological effort is required for saving earned money.

9. Keeping a bit out for emergency

Keep some extra money out in your budget for emergency use. If the money is not used up at the end of the month add it in your monthly savings.

10. Annualized Spending

If you eat a 20 rupee snack daily at some point of the day, it means you spend a definite 7300 rupees every year on one particular snack, so it can be saved if required.

MINIMIZING LUXURIES

11. Cooking food at home

Make yourselves healthy economical food every day to meet your financial needs instead of spending money in restaurants and canteens.

12. Vacationing near home

Instead of spending excessive money on outstation trips, prefer vacationing in your own vicinity, spending as little as possible.

13. Minimize utility without resent

Efficient utility of the in-budget necessities can be very helpful for low waged employees. No resent helps in staying positive and saving up energy for more and better work for better earning, ultimately increasing the amount of savings.

14. Shop effectively and only for necessary things

Branded clothing in seasonal sales attract a lot of customers. Buying such items is a waste of money.

15. Spending only on absolute necessities

Oftentimes we get distracted by the allure of fancy products in the market which we have no need for. Try to save your money by only buying what is necessary.

PERSONAL INVESTMENTS

To save money on a larger-scale, people in Pakistan typically make the following investments on their own:

16. Property

People buy properties and then sell them when they require their saved money. A plus point about this is that the cost hardly ever reduces and there is no loss.

17. Gold

Buying gold is risky in the sense that its price fluctuates daily. However, it is a popular way of saving money because the amount of money that is not sufficient for property is always sufficient for gold.

18. Renting properties

People often rent out their properties and then save money that they receive as rent.

19. Side businesses

Like the above-mentioned investments people invest money in various businesses, hoping to receive more and meet no loss, this way is also unreliable.

20. Committees

Committees are formed at community level and the members submit a fixed amount every month to the head. The total is then given to one person of the committee each month.

LARGE-SCALE SAVINGS OFFERED AT INSTITUTIONAL AND GOVERNMENT LEVEL

21. NIT units

National investment unit trust offers certificates to people who want to invest and their money becomes a part of the units’ fund. They then distribute the money amongst the investors.

22. Shares In stock exchange

Different factories need investments and they sell shares, people buy these shares and the yield of the factory is distributed amongst the shareholders.

23. Prize bonds

Government launches certified prize bonds of different amounts. People buy these bonds, the money received by the government is used up and the profit is sent out to buyers through ballet system.

24. Qaumi bachat scheme

A scheme offered by government similar to prize bonds. They sell out special saving certificate, defence saving certificate etc.

25. Insurance policies

Insurance companies receive money from people who mean to save it and insures them their required money at the time of need. Different types of insurances include health, life, education, marriage etc.

Compare Health Insurance at SmartChoice.pk: Click Here 

The story of savings starts from the basic level to a large-scale level. It is not difficult even for employees with low wages to save money if they follow the recommended options efficiently and without break.

Khurram Zahid

The post 25 Ways to Save Money in Pakistan if You are a Salaried Person appeared first on Smartchoice.pk.

Let’s talk about the Dos first. Below we’ve listed some really important ones.

Do Plan Ahead Of Time:
This is indeed a vital aspect when it comes to travel insurance. Get a travel insurance ahead of time just like you apply for your Visa in advance and never put it off for the last minute. This will be highly beneficial in case your travel group goes bankrupt or the trip gets cancelled for any untoward reason. The insurance provider in this case will refund you your trip cost and the ticket cancellation cost. That’s a lot of money saved from going wasted.

Do Get The Right Policy:
When making your purchase, make sure that the duration of the policy is correct and covers the day of your departure till the day of your arrival back to your hometown. Additionally check that the policy you’re buying has adequate coverage for all the things you need coverage for. Also make sure that you’re buying the right type of policy for e.g if applying for a Schengen Visa then the relevant policy is mandatory or if you’re a senior citizen then make sure you buy a policy that suits your age bracket and gives you relevant insurance cover. Also compare policies by various providers to see levels of coverage against the amount of the policy. If you plan to go in a group with friends or family, buying a group insurance instead of individual ones can also prove to be economical and better choice. Bottom line is that do proper research before buying your travel policy so the purpose and coverage are as per your travel needs. You can visit our portal to search, compare and buy travel insurance policies in Pakistan by major insurance providers online.

Do Know Your Refund Policy:
It’s a good idea to know the cancellation terms and conditions on your insurance. Most travel insurance providers let you cancel the policy within 14 days of issuance if you haven’t got your Visa approved. In case you are unable to travel due to lack of a valid Visa then you can get a refund against your travel insurance policy

Now let’s talk about  few of the things you should definitely refrain from when you plan to get yourself travel insured.

Don’t Hide Any Medical Conditions:
If you have any ailment or any medical condition and you think you’ll be able to save any money by not declaring it, you’re very wrong. In case you need any medical assistance on your trip and you haven’t declared it already. It will lead to your claim being null and void and will not be honored by your insurance provider if your illness is linked to your medical conditions. This will lead to a whole lot of expensive bills being paid by you and fair caution here that medical facilities abroad can be extremely costly as we have mentioned in our article “DON’T Fly To These Holiday Destinations Without Travel Insurance”.

Don’t Lose Contact Details:
Write down or keep a list of your insurer’s foreign contact numbers handy. These will be needed whether you need to make a claim for lost baggage or medical bills etc. You’ll need to inform your insurer beforehand thus making the mistake of not carrying the numbers could lead to hassle in urgent and emergency situations.

Don’t Ignore The Fine Print:
When you plan on purchasing a policy, make sure to read all the Terms & Conditions properly to know what events and things are covered under your insurance policy and also learn of all the exclusions so there’s no confusions and disappointments when you make a claim and it ends up rejected. Really, it’s an important thing that most of us ignore thinking as unimportant but not knowing what can be claimed and what can’t could end up with you losing on the benefits you could avail or paying through your nose in certain scenarios.

That brings us to the conclusion. Following the above guidelines will surely help you make the most out of your travel insurance plan and will save you from unwanted hassle and monetary loss. For any feedback, write to us at feedback@smartchoice.pk

Khurram Zahid

The post 6 Important Dos and Don’ts of Travel Insurance Plans appeared first on Smartchoice.pk.

In recent days, tensions between Pakistan and India have escalated to such heights that there has been unprovoked firing across the Line of Control due to which many nearby civilian areas have also been affected and there have been causalities as well.  With the risk of war looming around, it’s always a good idea to have insurance cover. In this article we will pinpoint some of the key types of insurance one must avail for sure while living in such sensitive areas of the country.

Life & Health Insurance:
It’s widely said that “Health is Wealth” and this is surely said for all the right reasons. A person can only perform and manage his daily workflow only if he is well and fit enough to do so.  Staying health is one of the most aspects of one’s life.  The organization where you work might have already offered you health insurance as a benefit but the covers associated with health insurance are only for the cost of treatments of any ailments or injuries etc. hence you should preferably get life insurance to counter the omnipresent threat of terrorism hence in the unfortunate scenario of death or major disability, your family gets financial support to continue their everyday life without being interrupted abruptly. Ideally you should buy a cover that provides you around 5 to 10 times of your annual income in monetary compensation and if you have any loans or liabilities then it should be around 15 to 20 times to provide enough timeframe for your dependents or next of kin to cope up and become stable.

Property Insurance:
Next in the line of assets in terms of value is usually one’s property. You should get insurance cover for your property be it for business purpose or residential. It protects damage to property and personal possessions in the case of terrorism and incidents of explosions or fire etc. Choose a policy that covers these incidents under terrorism to ensure adequate compensation.

Car Insurance:
Going forward, let’s talk about cars. Usually these are the most valuable assets after property and should be insured. For those people who live in such areas where terrorist activity is imminent, it’s advised that they opt for comprehensive car insurance instead of just third-party insurance to make sure that their car is safe from risk of fire, damage, arson, terrorist attacks etc. And in case of total loss you’d be reimbursed as per the depreciation and current market value. We’ve our car insurance portal where you can get real time quotations for your new or used car and compare different policies and buy an auto insurance plan online too!

Conclusion:
Lastly we should also mention that these policies do not cover biological, chemical or nuclear attacks. However it’s still encouraged that you opt for the above mentioned insurance plans to minimize the loss of money and property as well as get some compensation against loss of life or disability even though there’s no true replacement of life. Also buying insurance policies for property is a really sane idea because in case your area needs to be evacuated for any military operation, chances are that your property will sustain damage. Government is supposed to compensate people for any losses occurred but as the situation prevails in Pakistan expecting anything from the government within due time would be equal to blowing a trumpet in front of a buffalo. Thus you should consider taking matters in your own hands and ensure that you and your loved ones have a safety cover in case the worst happens though here’s hoping that such a time never befalls upon us however the wise man said that “Prevention is better than cure” and that says it all!

Khurram Zahid

The post Living Near PAK-IND Border? Here’s Why You Should Consider Getting Insurance appeared first on Smartchoice.pk.

“Finance Minister Mr. Ishaq Dar is said to have approved a budget proposal to charge a single income tax rate of 31% from the new financial year 2016-17, on all sources of income of insurance companies,” said sources in the Federal Board of Revenue (FBR).

At the moment, insurance income is put into various categories with tax rates from 10% to 32%. It’s pertinent to mention here that it’s not just the insurance sector that gets taxed within different brackets. Other corporate sectors also get the same treatment.

Finance Minister Mr. Ishaq Dar has also cleared a budget proposal to levy a withholding tax on insurance premiums,” added the sources. “A rate of 1% withholding tax may be imposed on life insurance while for general insurance it could be as high as 4%.”

According to an alternate proposal, the government is also likely to increase tax rates on health and life insurance commission agents who are non-filers of income tax returns, while the minimum tax on corporate service providers, who submit their accounts for audit, may also go up from 2% to 2.5%.

The size of the insurance business in Pakistan is very small, constituting about 0.8% of Gross Domestic Product (GDP) including the public sector insurance companies. This ratio is 3.8% in India, 3% in China and 8.6% in Germany.

According to the Insurance Association of Pakistan (IAP), there are six private insurance companies working in life insurance business excluding state-owned State Life Insurance Company. The private life insurance companies’ gross premium stood at Rs74.2 billion and they earned Rs3.2 billion profit after tax in the year ended on December 31, 2015. The 30 general insurance companies had gross premium of Rs61.3 billion and their after-tax profit stood at Rs13.6 billion, according to the IAP.

The government may increase the income tax rates on dividend income and capital gains to bring it at par with the standard corporate tax rate of 31% for the insurance sector, said the sources.

Currently, the income of insurance business, dividend income and capital gains is taxed in the range of 10% to 32%. The standard corporate rate of 32% will be reduced by 1% to 31% next year under a five-year corporate tax rate reduction plan. However, to counter the effects of this reduction, the government has been steadily increasing the rates of other source like dividend income.

The FBR thinks that insurance companies tend to invest in stocks and mutual funds to avail tax benefits and the purpose of a change in tax structure is to discourage this tendency.

The private insurance business hardly exists in the country and any upward revision in tax rates will have devastating effects on the sector and the insurance cost will go up, said Policy Research Institute of Market Economy (PRIME) Executive Director Ali Salman.

“The heavy presence of public sector in the insurance business is also detrimental to the sector’s growth. Moreover, the foreign exchange that the country earns by exporting the re-insurance services could also get affected due to these changes,” he added.

The government may also slap 1% withholding tax on life insurance premiums and claims and 4% on general insurance. The insurance sector is so far exempted from payment of withholding tax.

The commission paid to life and health insurance agents is taxed at the rate of 12% for filers and 15% for non-filers. The government may reduce the rate for filers to 8% but for non-filers the rate may be proposed to increase to 16%.

Khurram Zahid

The post Insurance Sector To Become Victim Of Drastic Tax Structure Reform! appeared first on Smartchoice.pk.

However to people’s dismay, the accidental death insurance benefit of the Smart Card has been terminated just after a little over a couple of years after its launch in January 2013.

According to inside sources, the insurance claims were paid during the initial two years of the scheme’s introduction. However now no new claims are being entertained. The reason for discontinuation of this facility is due to the agreement between NADRA and State Life Insurance Company was due to be renewed after 2 years has now expired and NADRA’s present management has failed to pay the premium for continuing the scheme to the insurance company.

The agreement was penned in October 2012 by SLIC chairman Aziz Siddiqui and NADRA chairman Tariq Malik, which enabled SNIC holders to be automatically entitled to an insurance cover of PKR 100,000 for a period of 2 years. The holders could designate nominees at the time of this registration, who could collect the insurance amount at the time of their death.

There is no comment from NADRA representatives yet on this matter. Smart Card holders however are disappointed as this insurance cover was deemed as a blessing for many families to provide some kind of relief at the time of demise. We hope that NADRA can somehow restart this initiative to facilitate smart card holders as promised earlier.

Khurram Zahid

The post Insurance Scheme for Smart Card Holders Terminated! appeared first on Smartchoice.pk.