Financial planning is a core keyword to life's success. And, it is very important for salaried employees. The hard-earned money should be used for the right purposes, saved for the necessary obligations and secured for retirement. But, when you have a large chunk of money stepping into your life, how do you go about handling it? Here are a few financial planning tips to help you in this regard!
Financial Planning for Salaried Employees
The financial plan for every individual will depend on their lifestyle and family obligations.
Prepare a monthly budget - A monthly budget is one of the best and primary means to start financial planning. Have you been introduced to the 50/30/20 hard and fast rule for financial planning? Well, it states that 50% of your income should go for your needs, 30% to satisfy your wants and 20% to your savings. If you can increase the percentage of savings, it will be a good financial initiative to secure your life. You can decide on the monthly budget based on the following steps:
List down all the different sources of income.
Write the different types of essential expenses such as groceries, medicines, etc. Reserve a fund for your savings.
Write down other expenses such as relating to travel, clothing, entertainment, etc.
Allocate your different sources of income to the necessary expenses based on your priorities.
Ensure not to exceed beyond the allocated funds.
If you have this monthly budget plan active, your life will get financially stable while saving funds for the future and helping you plan for early retirement.
Make a long-term financial plan - Having a long-term plan is an important financial planning tip. It will help your savings fund reach the essential money goals to satisfy your personal and family financial obligations. Here are a few steps to do financial planning effectively.
Write down your short-term and long-term financial goals. Short-term goals can be purchasing a new car, home appliances, etc., And long-term money goals can be paying for your child's higher education, planning for their marriage, etc.
Calculate the approximate funds required to accomplish such financial objectives.
Decide on the timelines to ensure the same.
Based on the financial goals and the timelines, decide on the type of investments.
Ensure to choose investments with more liquidity to satisfy the short-term goals and the others that can help in capital appreciation to account for the inflation rate that can help accomplish your long-term goals satisfactorily.
Tax* Deducted At Source(TDS) can be burdensome for many salaried employees. Therefore, purchasing tax*-saving investments is one of the most important tax* planning tips for salaried employees to reduce the payable tax* liability.
If your family is dependent on you for their survival in any way, saving in life insurance policies becomes extremely vital. It will help your families reduce the financial burden in the event of your unexpected demise.
Insurers have been providing customisable, comprehensive life insurance plans that combine life cover with savings and investment benefits. For example, when you purchase TATA AIA plans, you can opt for savings or wealth insurance plans. The savings plans provide a guaranteed1 return at maturity, and the wealth insurance plans help you invest in financial securities.
You can purchase them online by observing details with respect to features and cost. Life insurance plans provide a tax* deduction and exemption benefit based on the premium paid and the payout received.
Retirement planning - Retirement planning is another important financial objective to help lead a peaceful life after the difficult and busy employment phase. Here are a few early retirement planning tips.
Start planning for your retirement early when you start your career.
Based on your lifestyle, decide on the kind of expenses that you might have to incur daily.
Calculate the expenses accounting for the inflation rate.
Save or invest in a financial product that can accumulate a huge corpus for your future retirement financial needs.
Choose an annuity plan to invest the corpus earned during your employment phase. The immediate annuity plan will start providing the regular income immediately after the purchase of the annuity plan, and the deferred annuity plan will start providing the regular income after a deferred date.
Financial planning for a salaried employee is important to devise the right strategies to spend, save and invest money wisely. But, unfortunately, some people spend their income in the first few days and suffer towards the end of the month. And many save a good amount of money but never know how to invest in securing the future while also enjoying the current life. So, working on a financial plan becomes very important!
Financial planning is essential to ensure financial independence that can pave the way for early retirement. You must understand your priorities, figure out your different sources of income, and make a monthly budget and a long-term financial plan at a younger age to secure your future.
Equally important is finding retirement planning solutions to help you lead a peaceful life at an older age. While there are different financial investment options, choosing the right products early in life and staying invested should be a primary money goal!
In addition, many tax*-saving investments can help you invest for capital appreciation while also saving taxes*. Therefore, be informed, plan early, secure your future and lead a happy life after your salaried employment life!