Getting a salary increment is certainly a great achievement and rewards for your hard work. It is time for celebration and also to give a fresh look to your financial planning and goals. The extra income has important financial significance. You may want to improve your standard of living or for that matter thing of moving to a bigger home. The family members may think of overseas travel or going for a shopping. However, with a salary hike also comes a huge responsibility! Got a Salary Increment? Here are 4 immediate things you must do:
Pay off debts
Your first and foremost responsibility immediately after the salary increase should be to review all your debts. And, with the raised income before you plan to spend it, you may use the surplus money to pay off any pending financial liabilities. You can think of paying off the home loan or car loan EMIs. Get rid of any personal loan or pay the pending credit card bills, etc.
When you pay off or reduce your debts - you also contributes towards growing your wealth.
Review your life insurance plan
With the increased income, over the years, the standard of living for you and your family also gets enhanced and this means that you now have greater responsibility for your family. Therefore, you will also need to upgrade your life insurance plan. With this increase you may think of widening your personal income insurance plan to ensure it is sufficient to support your family in case of your unfortunate demise. According to financial experts, your life insurance plan must at least be 10 times your annual salary. You should enhance your current life insurance cover. If you do not have a life insurance plan, now is the right time to buy one!
Increase your net worth
With the increase in your monthly income, you should try to enhance your net worth. This you may do by investing a part of your increased salary in ULIPs for protection and long-term wealth creation. You can also invest in market-linked funds, such as equity, debt and balanced funds, as per your risk tolerance, investment horizon and financial objective. A smart investment move with your salary increment will prove beneficial in the long run.
Plan for taxes
A salary increment means an additional influx of money, and this may put you in a higher tax bracket. So, you must think of reducing your tax liability by investing in a suitable life insurance plan. It is important to choose the right savings policy and investment plan. And, if you are aware of the factors, you can make informed decisions about savings investment plans. Need more information on saving plans? Call us at 9818510748.
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