Maintaining your budget should be of utmost priority once you start earning. Begin with setting aside the amount for your debt repayment at the initial days of the month. Apart from our basic needs as rent and services, one shouldn’t curb their wish to splurge on outings and parties. So, what would be the ideal way to utilize the salary, so as to maintain the balance. Here are some thoughts.
Plan and work on a budget that projects how much you should save, invest and spend. Any successful financial goal can be met if you know the art of spending money well, along with effective saving and investing. When you receive your salary, list out your regular and optional expenses, and allocate an amount for saving and investing. Though it’s easy to create a budget sticking to it needs resilience.
What you save and invest will be your security for future financial requirements. Ideally, allocate about 20% of your income for savings and investments. Saving and investing from the very start will boost your financial standing later on. Research and invest products based on your age, income, risk profile and financial goals. Even a recurring deposit (RD) account in your bank will involuntarily help you save some amount every month. You can also save some amount in a Fixed deposit as per your capability. Start a mutual fund SIP to fund so that money from your bank account is invested for a higher and better return in the future. Maintain an emergency fund that can help you overcome any unexpected eventualities like job loss or medical emergencies.
To have a healthy financial standing, clearing off any bills and outstanding payments should be your top priority when your salary arrives. The amount you need to clear off your debt should be set aside at the beginning of the month. Make a list and prioritize them as per the rate of interest and due dates. You can also choose to link your payments to your bank which would self execute, to avoid missing deadlines and having to late payment fees. Bills such as Credit cards should be paid off before the due date to steer off any interest charges or penalties.
Insurance works as protection that reduces the financial uncertainty arising from any unforeseen eventuality like illness or death. Term and health insurance policies ought to be invested in for all salaried individuals and dependent family members. Most people are unaware of the enormous benefits which the insurance brings forth, as they don’t see them as giving any financial returns. Insurance is not just an investment, it is a security cover for yourself and your family under dire situations. In case of an unfortunate event of your death, term insurance would work as a substitute income tool for your family. Health insurance helps in dealing with rising medical costs during expensive treatment and hospitalization.
To enhance your competency or be more proficient, you can utilize your salary to upgrade your skills or learn a new one. An extra degree, a diploma, or even a specialization certificate can take your career up many folds, which in return will bring in additional income and lower your financial obligations.
Allocate some amount of your salary to some recreation and entertainment for a healthy mind. But be smart and sensible about the amount you spend on your relaxation and pleasure, so as to not put a dent on your budget.