Summary of this article
Tax savings amplify security only when backed by emergency funds and adequate insurance.
Outdated health cover and high-interest debt can wipe out years of tax efficiency.
Investing only to “save tax” often leads to scattered portfolios and missed goals.
Understanding the right tax regime matters more than chasing deductions that no longer apply.
As Budget 2026 approaches, Delhi-based Abhishek Mishra, like many salaried professionals, has been closely tracking tax expectations. Will the standard deduction be raised further? Will deductions under the old tax regime be expanded? NPS benefits? On paper, even small changes look meaningful when you calculate the annual savings.
But earlier this year, he faced a reality check. His daughter needed hospitalisation for a week. The bill came to Rs 2.8 lakh. Insurance covered part of it, but the balance came straight out of savings he had mentally earmarked for other goals. In the same month, an unexpected car repair added another Rs 45,000. He realised something uncomfortable: while he had been planning tax efficiency, his financial foundation was fragile.
Budget relief, if it came, wouldn’t fix that.
Why Budget Expectations Often Miss The Point
Every year, families wait for the Union Budget, hoping it will meaningfully improve their financial situation. And to be fair, recent budgets have offered tangible relief. The revised new tax regime has lowered tax outgo for many middle-income earners, improving take-home pay. But tax savings only create opportunity. Whether that opportunity translates into security depends on what sits underneath.
Sanjiv Bajaj, Chairman & Managing Director, BajajCapital, observes, “Tax efficiency works best when it is built on financial discipline. Without the right foundations like insurance, savings, and planning, tax relief often ends up funding short-term spending rather than long-term stability.”
Before Budget 2026 arrives, there are a few money gaps worth fixing regardless of what the Finance Minister announces.
Gap 1: No Emergency Cushion
The most common and costly gap is the absence of an emergency fund. Many households have investments, but very little truly accessible savings. One medical bill or job disruption is enough to derail plans. A practical benchmark is six months of essential expenses kept in liquid, low-risk options. Without this buffer, tax savings often get wiped out by one unexpected event.
Gap 2: Insurance That Looks Adequate But Isn’t
Another blind spot is outdated insurance. A policy bought five or six years ago may still exist, but rising medical costs have reduced its real value. Families often focus on the Section 80D deduction while ignoring whether their health cover would actually protect them today. Underinsurance creates false comfort - until a claim exposes the gap.
Bajaj notes, “Insurance decisions shouldn’t be driven by tax deductions alone. Coverage has to reflect today’s healthcare costs and the family’s life stage, otherwise it fails precisely when it’s needed most.”
Gap 3: High-Interest Debt Running In The Background
It’s common to see people invest aggressively for tax savings while carrying expensive credit card or personal loan debt. In such cases, the math doesn’t work. Paying down high-interest debt often delivers better financial outcomes than any tax-saving instrument. Budget relief should ideally accelerate debt reduction, not postpone it.
Gap 4: Tax-Saving Without Goal Clarity
Many investments are made simply to “save tax” before March, with little thought to long-term goals. The result is a scattered portfolio that reduces tax but doesn’t build meaningful wealth.
Tax efficiency should support goals like retirement, education, or home ownership - not replace them.
Gap 5: Regime Confusion
With the new tax regime becoming the default option now, many taxpayers are still investing in deductions that don’t apply to them. Without calculating both regimes properly, money can get locked into products that offer no tax advantage at all.
This is one area where a simple review can unlock more benefits than any Budget announcement.
Putting The Budget In Perspective
Six months after his wake-up call, Mishra focused on what he could control. He built an emergency fund, upgraded insurance, reduced high-interest debt, and aligned investments to clear goals. When Budget discussions resumed, he watched with interest but not anxiety. That’s the shift worth aiming for.
Budget 2026 will bring changes, some helpful, some incremental. But tax relief works best as an optimiser, not a rescue tool. The real preparation isn’t predicting announcements. It’s fixing the money gaps that quietly weaken financial security year after year.
Because when the basics are strong, even modest tax relief compounds into long-term confidence. And when the basics are weak, no Budget, however generous, can do the heavy lifting for you.
