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IN THIS POLICY, THE INVESTMENT RISK IN INVESTMENT PORTFOLIO IS BORNE BY THE POLICYHOLDER
 

5 Wise Ways to Spend Your Salary

Started earning recently? Congratulations! Did you ever think of putting a portion of your salary in a life insurance policy or in a mutual fund as you began earning? No?
 

Well, you are not alone! Most people prioritise partying, going on weekend getaways, spending on expensive apparel, buying trendy gadgets, dinners, and movies as soon as they begin to get paychecks. Amidst this, securing your financial future takes a backseat.
 

Your parents or elders might have asked you to cut down on spending too much. Time and again, you are reminded of the advantages of spending money wisely by them. And for all the right reasons.
 

Reasons for spending smartly
 

Life has never been more unpredictable than it is today. With changes occurring dynamically across the globe, there is no guarantee of what tomorrow brings. The recent pandemic has left millions of people struggling to survive. Some lost their jobs, while others had to deal with pay cuts and slow business. You never know when the next pandemic or an economic lowdown will strike. And, you don’t want to be rendered helpless at some time.
 

Even dreams are costly these days. You need Lakh and even crores to fulfil your wish of buying a home, getting a car, or living a comfortable retirement life. Let’s not forget the milestones of your child’s education or marriage.
 

Although there’s nothing wrong with spending on things you love, it is important to invest some time in planning for your dreams, living a cushy life and securing yourself and your family against unforeseen circumstances.
 

The good news is that you don’t have to be an expert in financial planning! All you need is to conduct a salary analysis and draw a plan to manage your income wisely.
 

Here are five tips for managing your expenses 


 

  1. Identify Your Current Needs and Future Goals
     

    How much money do you need on a day to day basis? What are your dreams? Do you have any short-term goals in mind?
     

    Ask yourself these questions to determine the amount of money you need currently and in the future. For instance, you have utility bills to pay on a monthly basis or need to keep aside some amount for recreational activities. These are your everyday financial requirements. You also need to account for future goals. Let’s say you plan to buy a house in the next 10 years or plan to start a family after 5 years.

    Make a list of such financial objectives to get an estimate of the sum you need to save and accumulate.
     

  2. Create a Salary Spending Plan
     

    Once you have an estimation of your overall financial requirements, proceed to create a spending plan or a budget. To do this, make a note of your income, fixed expenses and variable expenses.
     

    The 50-30-20 rule can be extremely beneficial to conduct a salary analysis and manage it efficiently. When you apply this formula, you are allocating the money you earn into three major categories instead of dividing it into hundreds of things. These categories include fixed costs, flexible expenses and financial goals.
     

    Keep 50% of your salary for fixed expenses like rent, utility bills, essentials, etc. 30% can be kept for flexible costs like eating out. The remaining 20% goes toward the financial goals that help you develop a rich financial future, such as in a guaranteed1 return plan for retirement, investments and emergency funds.
     

  3. Buy a Life Insurance Policy
     

    Your salary spending plan is incomplete without life insurance. Death, accidents, and illness usually come without warning. In the event where you are no longer able to provide for your family and children, they will suffer emotionally as well as financially. This is especially true if you are the only earning member in your family.
     

    Life insurance may be considered a way to "spend your salary wisely," as it is primarily a tool for providing financial protection to your loved ones in the event of your unexpected death. Since life insurance can have financial planning benefits, such as helping to pay for final expenses or leaving a legacy for your beneficiaries, it is viewed as a means of spending your salary to gain financial security for your loved ones.
     

    It is a way to help ensure that your loved ones are taken care of financially if you die, which can provide peace of mind and financial security for you and your family.

    Buying life insurance can be a smart financial decision for several reasons:
     

    Protecting your family: The primary reason to buy life insurance is to provide financial protection to your loved ones in the event of your death. Life insurance can help cover expenses such as final costs, mortgage payments, and everyday living expenses. This can ensure that your loved ones are not left with a financial burden.
     

    Estate planning: Life insurance can also be used as a tool for estate planning. For example, you can use a life insurance policy to help pay estate taxes and other expenses, which can help preserve the value of your estate for your beneficiaries.
     

    Potential cash value growth: Some types of life insurance, such as whole life insurance, have a cash value component that can grow over time. This cash value can be used as a source of funding for various purposes, such as paying for a child's college education or providing an additional source of retirement income.
     

    Tax* benefits: Life insurance premiums can offer tax benefits, while the death benefits and maturity benefits on some types of policies may be tax-free in the hands of the beneficiaries.
     

    Set aside some amount of your salary in insuring your life and health to make sure you and your family are taken care of in an unfortunate situation. If you are young and healthy, then you can also opt for savings insurance options that help you safeguard your loved ones and create wealth for your future goals. You also get riders# to increase the protection and cover for your spouse. You can buy and pay for it in a few clicks with TATA AIA online premium facility. 
     

  4. Begin Investing
     

    There’s a reason why experts stress investing early. The more years in your hand, the better the returns you gain. You can also take advantage of riskier investment options with the potential for greater returns as you are in a better position to take some risk.
     

    Let the money you earn work for you by investing in market-linked securities such as equity stocks, debt instruments, or mutual funds, depending on your goals. Unit linked insurance plans are also a great option to save for life goals. If you have a retirement plan in mind, then a guaranteed1 return plan can be an ideal investment option.
     

  5. Monitor and Treat Yourself
     

    Once you have started spending your salary wisely, you need to monitor it from time to time; else, there are high chances that your budget might go for a toss. As you implement your salary spending plan, keep track of your progress and make changes wherever necessary. For instance, you might have received a raise, or you need to cut down on certain expenses. This calls for certain amendments to your plan.
     

    At the same time, do not become too rigid. Do make some space in your budget for a vacation or purchase your favourite item from an international brand. Most importantly, reward yourself by indulging in things you love to celebrate your progress.
     

    Following these simple measures to manage your income will help you reap one of the biggest advantages of spending money wisely; financial independence, among many others. 

     

L&C/Advt/2023/Feb/0526

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Tata AIA Life Insurance

A joint venture between Tata Sons Pvt. Ltd. and AIA Group Ltd. (AIA),  Tata AIA Life Insurance  is one of the leading life insurance providers in India. We post everything you need to know about life insurance, tax savings and a variety of lateral topics such as savings and investments in this space. You can access and read a host of different blogs, articles and pages at the Tata AIA Life Insurance Knowledge Center or get in touch with us with any queries or questions!

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Disclaimer

  • Insurance cover is available under the product.
  • The products are underwritten by Tata AIA Life Insurance Company Ltd.
  • The plans are not a guaranteed issuance plan, and they will be subject to Company’s underwriting and acceptance.
  • For more details on risk factors, terms and conditions please read the sales brochure carefully before concluding a sale.
  • This blog is for information and illustrative purposes only and does not purport to any financial or investment services and do not offer or form part of any offer or recommendation. The information is not and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.
  • Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document issued by the insurance company.
  • Every effort is made to ensure that all information contained in this blog is accurate at the date of publication, however, the Tata AIA Life shall not have any liability for any damages of any kind (including but not limited to errors and omissions) whatsoever relating to this material.
  • #Riders are not mandatory and are available for a nominal extra cost. For more details on the benefits, premiums and exclusions under the riders please refer to the Rider Brochure or contact our Insurance Advisor or visit our nearest branch office.
  • 1Guaranteed Returns/Payouts depend on Plan Option, Policy Term, Premium Payment Term and Age at entry
  • THE LINKED INSURANCE PRODUCT DO NOT OFFER ANY LIQUIDITY DURING THE FIRST FIVE YEARS OF THE CONTRACT. THE POLICY HOLDER WILL NOT BE ABLE TO SURRENDER/WITHDRAW THE MONIES INVESTED IN LINKED INSURANCE PRODUCTS COMPLETELY OR PARTIALLY TILL THE END OF THE FIFTH YEAR.
  • Past performance is not indicative of future performance.
  • All investments made by the Company are subject to market risks. The Company does not guarantee any assured returns. The investment income and price may go down as well as up depending on several factors influencing the market.
  • Please make your own independent decision after consulting your financial or other professional advisor.
  • *Income Tax benefits would be available as per the prevailing income tax laws, subject to fulfilment of conditions stipulated therein. Income Tax laws are subject to change from time to time. Tata AIA Life Insurance Company Ltd. does not assume responsibility on tax implications mentioned anywhere in this document. Please consult your own tax consultant to know the tax benefits available to you.