Your Salary Has Been Credited! What Should be Your Next Steps?

Small financial decisions you make today can have a big impact on your long-term financial future.

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The much-awaited message - Your salary has been credited - is the best message that your mobile reflects on the day you expect your salary. Of course, the first instinct is to spend on things that you love. However, being a working adult, you need to be more responsible over what you are spending your monthly salary on.

After all, the small financial decisions you make today can have a big impact on your long-term financial future. Therefore, before you start spending on expensive clothes, latest gadgets or that gourmet dinner, here are four things you should consider planning for with your salary every month.

Build Emergency Funds

Since childhood, we have been told the importance of saving for rainy days. Being an adult, its time that you put this into practice. You must have emergency funds that you can tap on in case of unpredictable events like:

  • Car or house maintenance
  • Medical emergency
  • Job loss

Therefore, its ideal to have at least six months worth of living expenses saved for emergency purposes. However, if this figure seems too daunting, try to save whatever you can - even 3 to 5 per cent of your salary every month to start with.

Reduce or Clear Your Debt

Being debt-free is one of the most effective ways to live a peaceful life. After all, snowballing debt can cause you financial ruin. Therefore, if you have any debt, start clearing it as soon as your salary is credited.

You can start with credit card debt and then move on to student loan or home loan. Along these lines, calculate the monthly repayments that you have to make and set aside an amount after you receive your salary. This will ensure that you do not default on any payments and also do not suffer additional interest charges.

Opt for Term Insurance

At this stage, the biggest asset you have is your ability to work and provide for your dependents. However, any unfortunate accident or unexpected medical emergency can rob you of your ability to work and provide for your loved ones. Understand that life is uncertain, and this fact cannot be ignored. Therefore, besides shaping your future, you need to safeguard it as well. Meaning, as soon as you start receiving your salary, you must think about your life insurance needs.

To hedge against the untoward events in life, consider purchasing an appropriate term insurance plan. Term insurance will offer adequate coverage for a small premium, ensuring that your dear ones are financially secure even in your absence.

Start Investing

It’s vital to start investing as early as possible. Because when you invest a certain amount regularly, the magic of compounding combined with good market returns helps to build wealth for all your life goals. Therefore, make sure that your salary not just remains stashed up in fixed deposits, but is carefully invested to grow all by itself.

So, starting this month, invest a part of your salary in prudent investments like monthly income plans. In a monthly income plan, you receive a guaranteed income every month after a few years of premium payment. The best part is, these plans also have an insurance cover to financially protect your loved ones after your demise.

Therefore, by ensuring that you get a regular income after your retirement, monthly income plans make sure that you aren’t hard-pressed to meet your future commitments and your loved ones remain financially secure, even when you are not around. Moreover, life insurers like Max Life Insurance offer monthly income plans with benefits like:

  • Accrued bonuses on maturity
  • Lump sum death benefit to the nominee in case of life assured’s demise
  • Premium waiver in case of life assured’s demise
  • Tax savings
  • Long-term coverage and so forth

Investing in monthly income plans can be a good solution, and this is where the monthly income plan calculator can help you. Using the monthly income plan calculator, you can easily calculate the premium payment term, sum assured, and the annualized premium for the same. Apart from monthly income plans, you can also consider investing in other long- and short-term investment plans like ULIPs, ELSS, PPF, etc.

To summarize, know the best use of your salary in order to strengthen your financial health. This will not only help you to enjoy greater peace of mind but also live life more confidently.

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