So you’ve finally left the world of academia behind, wrapped up the farewell parties, made reunion trip promises you most likely won’t keep, and are now gearing yourself up for a new chapter in your life as the “salaried” person. Let’s say you’ve even managed to hear back with some offers from some of the companies you interviewed at. So, then… the battle’s over, right?
Come on, you knew it wasn’t really over! Now the real grind begins. And it starts with something that’s part of your first job itself - your pay structure, which as you might have guessed from the title of this piece, includes the taxable bit.
No, we aren’t saying “don’t pay your taxes”, no sir. But if there’s a way you can save some of your hard earned moolah from being devoured by the taxman, please use it. Here are some pointers about tax-saving no workplace welcome kits will have.
#1 Can’t negotiate the pay? Negotiate the pay break-up
Early career pro-tip: do not be intimidated by the HR in a company, especially one who you feel is trying to tell you what you’re worth and more importantly, what you’re not. They are simply doing their job, and believe it or not, are people too. Granted, you might not be a negotiator extraordinaire in the early stages of your career, but you’d be surprised how accessible employers are when it comes to discussing your salary break-up. HR can help you with structuring your pay in such a way that a significant chunk can be brought under the tax-free components. Different companies have different methods here, but we advise you to talk to them about reimbursements such as phone bills, internet bills, medical reimbursement, transport allowance, books and subscriptions, etc. Sure this means you might need to keep your monthly bills handy, but at the end of every financial year, you end up saving a huge chunk of your pay from the taxman.
#2 Look for housing in legit areas
This is especially true in big cities, where thanks to the varying degrees of rents, areas have sprouted up where many homeowners prefer “all cash” rental deals. Great for them, not so much for you. I learnt it the hard way, but the lesson is, always look for housing in areas where landlords play by the rules and give you proper rent agreements and monthly rent receipts. When it’s time to show your rent proof, you want to be the cool person who has their receipts in order, not run around like a headless chicken scouring the office for printers or morally ambiguous colleagues who are good at forging signatures. No, seriously, don’t be that guy!
#3 It’s never too early to invest
Don’t have this image in your head that people with more worldly experience (read: older people) who give you investment advice are ‘boring’, or they might be running some kind of game to get you to part with your money. Unless they’re mentioning things like “multi-level marketing” or using phrases like “you make me rich, I’ll make you richer”, you can relax because they’re most likely trying to get you to not make the mistakes they did when they started out, present company included. The good news is, you’re in the golden era of investing. There are so many options available - mutual funds, stocks, pension schemes, insurance plans, digital assets, crypto-coins, etc., that you simply cannot say “I didn’t know”. At this stage of your career, you might not be thinking where you want to be when you’re approaching your forties, but you should be. Fifteen to twenty years of solid investing can literally propel you from one class to the next. And some of these investment options can easily fall under the 1.5L rupees India allows you to save from your taxable income.
So there you have it! Congratulations on reading this far, and I hope the message was clear - just because you’re young, doesn’t mean you should ignore personal finance. The earlier you start your journey of wealth growth, the more ‘ahead of the curb’ you shall be in this long, winding but eventually fulfilling road.
(This article on personal finance is part of The Quint's 'Save and Grow' campaign)
(At The Quint, we question everything. Play an active role in shaping our journalism by becoming a member today.)