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A bonus or salary hike is the fruit of all the hard work you’ve put in. When you get one, it is a great time to celebrate. But please do not go overboard with the celebration. Save part of the extra money to strengthen your financial plan.
Here are 5 ways to do that.
Pay off debt
If you have any outstanding loan (could be a home loan, education loan, or even credit card debt) divert a major chunk to repay or reduce these debts.
Set up or boost emergency fund
Emergencies can crop up any time and in different forms—medical emergency, loss of job, essential home repair, etc which are unforeseen. These situations require immediate funds. If you don’t have an emergency fund, then you may end up borrowing at a high interest rate. In order avoid such a situation, start an emergency fund, or beef up the existing fund as required. Make sure that the emergency fund can be liquidated easily to meet your urgent needs.
Save tax
A salary increase will naturally mean an increase in your tax liability. You can reduce it by investing in tax-saving investment options. The Equity Linked Savings Scheme (ELSS) or the National Pension System (NPS) are among the good options to save tax.
Buy or hike insurance
Insurance provides a security blanket for you and your family in dire situations. If you don’t have insurance coverage for you and your family, purchase one immediately. Try to time the premium payment when you normally receive your bonus or increment. If you already have insurance coverage, consider increasing the insurance coverage.
Increase investments
Your short-, medium- and long-term goals can benefit from your bonus. Increase the investments and you will be able to reach your goals sooner. You can either increase your monthly investments or make a one-time investment.
Always go by the rule of saving first and then spending. This way, you will never compromise on your savings.
Start your personal wealth journey with us today!
Plan to Maximize Your Retirement Years
October 4, 2018
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A bonus or salary hike is the fruit of all the hard work you’ve put in. When you get one, it is a great time to celebrate. But please do not go overboard with the celebration. Save part of the extra money to strengthen your financial plan.
Here are 5 ways to do that.
Pay off debt
If you have any outstanding loan (could be a home loan, education loan, or even credit card debt) divert a major chunk to repay or reduce these debts.
Set up or boost emergency fund
Emergencies can crop up any time and in different forms—medical emergency, loss of job, essential home repair, etc which are unforeseen. These situations require immediate funds. If you don’t have an emergency fund, then you may end up borrowing at a high interest rate. In order avoid such a situation, start an emergency fund, or beef up the existing fund as required. Make sure that the emergency fund can be liquidated easily to meet your urgent needs.
Save tax
A salary increase will naturally mean an increase in your tax liability. You can reduce it by investing in tax-saving investment options. The Equity Linked Savings Scheme (ELSS) or the National Pension System (NPS) are among the good options to save tax.
Buy or hike insurance
Insurance provides a security blanket for you and your family in dire situations. If you don’t have insurance coverage for you and your family, purchase one immediately. Try to time the premium payment when you normally receive your bonus or increment. If you already have insurance coverage, consider increasing the insurance coverage.
Increase investments
Your short-, medium- and long-term goals can benefit from your bonus. Increase the investments and you will be able to reach your goals sooner. You can either increase your monthly investments or make a one-time investment.
Always go by the rule of saving first and then spending. This way, you will never compromise on your savings.
Start your personal wealth journey with us today!
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