is very important in all aspects of life, be it paying an amount as loan installment or taking a deposit or saving a sum of money for future purchase. All this and much more are required in terms of planning. It is that time of the year where the boss will be inspiring you with a pay hike or he might tell you that doing business is difficult in current times. Therefore, financial planning is also very relevant at the appraisal time when you receive a hike in your pay cheque or during a festival when you receive an ex-gratia/bonus. The salary hikes should be used in the most appropriate manner as they are a savior from what lies ahead in the future. The growth rates in your salary account tell you the state of affairs of the company and which way your job is taking you.
The strategies should be based on the pay hike you get:
Planning for Less than 10 Percent Increment:
If the pay hike you got is less than 10 percent and it is also lower than the hikes of previous year then it is better that you should make a checklist of the expenses you have been doing in recent times. Try and curb your expenses and strive and increase the savings and route some more money in the investment schemes. Endeavor and develop your skills and take a review of your weakness at work that you should be ready to eradicate. This will help you in tough times and finding a new job will be much easier as your domain knowledge will take a new leap.
the Pay Hike is More than 10 Percent but Less than 15 Percent:
You will definitely be saving more and your motto should be to repay debts like home or personal loan before maturity. This will help to reduce your burden of loan but will also increase your salary by that amount. Take an example: Your EMI on housing loan was Rs 15000 per month. Suppose you get a hike of 12 percent that computes to Rs 60,000 based on your current salary. If other things remain constant, you can utilize the amount to repay a part of the loan. Make a separate savings account which should not be used until there is some
. The amount saved in that account will pool up and you can reduce the portion of debt to that extent.
Also, try and assess what is the most pressing thing to do at that point in time. It could be taking a medical policy to meet expenses, it can be your child admission for higher studies, and it can also be a household item you have long thought to purchase.
If there is No Salary Increase:
Make plans of how to beat the high inflation. Try and relook at the investments you have made in the past. If there is a possibility of re-jigging of portfolio, then this is the time to do that. When the salary component is same, it is better to make the maximum utilization of the resources available. There might be some other mutual funds or bond options that can give you more returns. Shifting is not a bad option. Keep some funds for contingencies. Reducing the expenses and investing in the most effective medium of investment should be done.
Problems with Employee Promotion:
The biggest problem is not before you get a salary hike but it sometimes starts after you get a pay raise. This means that suddenly you will find a long desire of purchasing or a vacation possible after getting a lump sum of money at one go. The money vanishes if you are not disciplined and after spending the entire amount, you will be realizing that there were some more pressing expenses that you should have catered before spending it in other places.
Always consider the fact that the rise in salary also brings about change in your status. It is your disciplined and conservative approach that helps you to take right decisions. Don’t just be squanderers after employee promotion. It doesn’t mean that you curb all your feelings and burden yourself, just make sure that you have some backing for the torrid time (if any). Saving should be proportionate to the salary hike.
If you were saving X amount previously before your salary increase of 10 percent it is better that it is X + 10 percent or X+15 percent after the hike. You have to increase the amount of your saving; this will make you financially secure for unseen expenditure.
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