The appraisal season much have ended in most of the companies and by now you must have received your revised higher salary for April month or will receive it in due course with arrears in May, so here are give some best of ways to not mismanage the extra money that you make now for your hard efforts now:
Few Do’s And Don’ts
Before you begin with management of the funds, it is a good evaluate to compute your appraised amount over your previous salary, as it will help you design some future financial goal in terms of salary from the next year probably and to achieve that what efforts you need to put in.
And also make it clear as to what you will get as your take home salary raise as the CTC component is inclusive of other expenses for the company such as PF contribution on behalf of the employer and other contributions such as towards gratuity amount.
Do and go by the wait and watch policy:
For some time evaluate your expenses and other considerations to exactly know how much you will begin to get as a new net salary.
Assess your household budget for a month:
Before deploying the extra money you would henceforth receive as hiked salary, carefully evaluate your expenses, repayment scheme for loan accounts as well as investments. And either on your own or through a financial coach, give a decision as to where you will be better off by deploying the extra buck i.e. whether you should pay off any current credit account or set the funds aside for long term financial goal or build an emergency corpus using the funds.
Save a minimum of 50% of your increment:
Save a minimum of 50% of your increment: Also, it is a thumb rule suggestion that of the total amount you receive as an increment, make it a point to at least save 50% of it and not feel free to spend the entire amount.
Enhance your insurance cover: As your life style improves day after day as you progress in life, keeping the same in mind, you should aim at accumulating a higher amount for your sunset years i.e. after retirement from work as part from your lifestyle goals you have to meet some of the expenses which cannot be do away with any costs.
Don't overlook taxes: After the salary hike has been effected, you may be required to assess your tax out go on it and hence look for the allowed deductions and exemptions in order to avoid paying higher tax.
Boost up your contingency fund with the raised amount:
Put the increased amount to build up or increase the size of the emergency fund which should be typically 10-12 times your monthly expenses.
Don't overlook yourself: You earned the extra bucks for the efforts you had put in during the last year, so don't forget to invest on yourself, you may pamper yourself through any of the offering, or can invest in your career too, to improve your future prospects.
Also, don't over board expecting similar hike in following years: As it is not always the same hike will be granted, so be reaonsable while making credit repayments and going for a higher EMI repayment or investments, such that your financial journey is not jeopardized in entirety.