Published By: Orna Ghosh

Smart Tips to plan on your salary.

Financial independence is not limited to earning a paycheck every month or paying your bills. Planning for life after retirement is also an aspect of financial freedom.

As remembered, we had a gullak (Piggy Bank) to put our savings from our pocket money. It was the first time that we learnt about the value of saving every penny. But as time went by, we grew up, and so did our expenditures.

Today, most of us are struggling to create a balance between our monthly income and our expenses. But, unfortunately, there are times when the amount of expenditure exceeds the salary digits credited into the bank account. To avoid this in future, we can follow the simple steps:

Note down the list of your monthly expenditure- While making this lists include rent, utility bills, food, groceries, travel tickets, and monthly insurance premiums. It will give us an idea about the monthly outflow of cash for a living. Noting down the expenditure might sound useless, but planning habits can save us an ample amount for the future.

Follow the 50+30+20 rule- It is one of the most efficient rules for planning on salary. According to the rule, we divide our salary into three major categories- 50% into fixed expenditure + 30% into flexible spending + 20% into financial investments. It is an intelligent way to spend categorically.

Invest the extra money for future returns- Invest the 20% of the salary into plans to receive greater returns for future goals. We can invest in short term investment plans (stocks, currencies, etc.) or long-term plans (mutual funds, SIPs, etc.). Before putting our money into the market, we need to consult a finance director for better returns.

Create an emergency fund- The motive behind creating an emergency fund is to ensure that we have three or six months’ worth of living expenses. In addition, the fund is helpful in case we get fired or our company decides to deduct our salary. An emergency fund is simply an account with enough money that remains hidden until a financial crisis occurs.

Cut off on expensive spending habits- Once we are done chalking down our monthly expenditures, we must take out time to cut off expensive money habits. It can include unthoughtful shopping, relying on eateries for food, unnecessary grooming sessions, and other financial drains.

Better control of financial habits is the key to peaceful and independent life. So take advantage of the above-written tips to enjoy money freedom wisely