6 ways to use your salary increment judiciously

Did you finally get your most awaited increment? You’re lucky enough to have it, and it’s a moment to celebrate. But your celebration should be followed by good financial planning. If you haven’t thought of it yet, you should start planning to invest that amount without making any wasteful expenditure.

To deal with the uncertainties, it is essential to invest in life insurance plan to stay all-time prepared for unforeseen events. If you can manage to pay out an amount out of your salary at regular intervals, you should start investing your money today.

Salary incrementAfter researching various types of life insurance policy available, you should choose life insurance depending on the extent of financial help that your family will require in case of your untimely demise or critical illness. Apart from the treatment-related costs, they’ll need funds for other expenses like household expenditure, school fees of your children, etc.

Let’s get into the details of how you can plan to use your salary increment.

6 ways to use your salary increment judiciously

1. Get rid of debt

After getting the increment, you should try to pay out your debt in a planned way to cut down your liabilities. You should prioritize paying your car loan or personal loan if you have any. In that way, you’ll save the interest amount that you need to pay with the EMIs.

This might not give you immediate happiness or satisfaction, but being debt-free in a short period will feel like a victory later. Also, this will improve your financial health. You can start with repaying smaller debt amounts and then move forward with larger debt amounts.

2. Life insurance purchase

It is the most important purchase which should be considered by everyone. As soon as you get your increment, you may have an idle amount. Rather than splurging that amount, you should make a wiser decision of investing it in life insurance. You can calculate the premium amount using a calculator available online by entering a few necessary details.

If you’re a first-time investor, you should carry out thorough research about the insurance provider and their terms and conditions. After that, you can make a fair comparison amongst the different insurance plans.

3. Invest in tax-saving instruments

Investing in a tax-saving instrument is a very lucrative option. According to Section 80C of the Income Tax Act, 1861, you can save a fair amount of tax if you invest in the right instrument.

Family conceptWhen you invest in a life insurance product, like ULIPs, it helps you earn returns via market-linked securities, give life cover, and help save tax on the investment. This turns out to be a perfect win-win situation and provides financial coverage for you and your family. Along with saving tax, a concrete arrangement can be made to fight financial uncertainties and unforeseen events.

4. Plan for retirement

Once people reach a certain age, they start devising financial plans for their future. In your 60s, you’ll need a passive income source, which can generate money for you while sitting at home.

For earning returns at that time, you’ll have to start thinking and planning right from now, such that you get a fair amount at that time to live a good and comfortable life. You can invest in insurance-based plans or government schemes like National Pension System to earn good returns later.

5. Emergency funds

An emergency can arise at any point in time in your life. You can’t control it, but you can at least keep yourself all-time prepared for the same. Therefore, it is necessary to have an emergency fund ready for the same always. If you could not do it until now, you could start doing it today with the increased salary amount.

6. PPF (Public Provident Fund)

Apart from life insurance, you can even start investing in PPF as soon as you receive your increment. It also helps you in availing income tax deduction up to Rs 1.5 lakh per annum. The interest amount that you receive on this is also tax-free. Again, this can be the first step towards saving for your retirement.

Make a judicious use of your increment

As all of us are aware, saving and investing are part and parcel of life, which should not be ignored if you’re dreaming of living a comfortable life. And, the happening of a few things is not in our hands, but making arrangements to shield ourselves is.

Therefore, you should select plans from reputable insurance providers like Max Life Insurance to get maximum benefits as per your fund availability. They mention everything explicitly to avoid any confusion in the future and have a rapid claim settlement process.

Invest today to make your life easy!