31
May
2022

9 Helpful Financial Planning Tips for Salaried People

Are you a salaried individual?
How seriously do you take your financial planning?

Financial planning is something that help you meet your daily weekly, monthly and long term financial needs. It can also equip you to fulfill your dreams and prepare for an emergency in all based on your salary.

Whether you have a financial plan based on your salary or not, here 8 financial planning tips that experts vouch for to help you build a financially secure future.

9 Expert Financial Planning Tips for Salaried Individuals

1. Determine Your Financial Goals

The best strategy for successful financial planning is to break down your financial goals into short-term, medium, and long-term goals. You can choose the investment options for your salaried income accordingly.

You can learn about family financial planning and seek expert guidance to identify your financial objectives. This will help you prioritize your financial needs and invest in the right plans.

Also, learn to differentiate between need and want. Your wants can wait or change in a few days. So always spend on your need first. Then think about your wants if you have money left.

2. Create an Emergency Fund

It’s imperative to create emergency funds so that you don’t panic in emergencies and spend all your savings. The thumb rule says to save your 3-6 months’ income as an emergency fund. You can keep saving some amount monthly till you reach this benchmark.

Remember to keep your emergency fund in such an account from which money can be quickly withdrawn in the time of need.

3. Conduct Due Diligence Before Choosing a Loan Provider

While it’s advisable to have some savings, most salaried individuals rely on their monthly salaries to take care of their expenses. It’s not uncommon for when you find yourself in a situation where you have to take care of an unplanned expense for which you might need to get a personal loan. With increasing number of private lenders offering personal loan for salaried professionals nowadays, it has become one of the most preferred options for many.

However, it is important to conduct due diligence and explore all the available options before applying for a loan so you can make a clever decision.

Here are some of the factors that one should look at before choosing a personal loan lender.

  • Low Interest Rates
  • Loan Tenure
  • Loan Repayment Flexibility
  • Is a co-signer allowed?

4. Get Your Total Net Worth

Do you know what your net worth is? You can’t be more wrong if you think the significance of net worth is for millionaires only. It’s good for everyone to know where you stand financially! It will help you reach where you want to reach.

To calculate your net worth, minus your total liabilities from your total assets. Begin your journey of financial planning from this baseline.

5. Make a 50/30/20 Budget

50/30/20 is a thumb rule for managing the cash flow. It is instrumental in the financial planning for salaried individuals. It says to spend 50% of your monthly income on paying regular expenses like groceries, electricity, water, and rent. Spend 30% on leisure such as dining out.

The rest of the 20% should go into creating an emergency account. Once you have sufficient funds in your emergency account, spend 20% on savings and investments.

6. Take House, Health, & Life Insurance

Bad luck can strike anyone anytime. While praying nothing undesirable happens to your family and home, you should prepare for it by taking the necessary insurance. Always ensure your house so that you can build a new one in case of a fire accident or earthquake.

Similarly, take life insurance and health insurance for yourself and your family so that your savings doesn’t wash away in medical treatment of yourself or a family member.

7. Allocate Your Savings

At whatever stage you are in your career, you need to allocate your savings. If you are a beginner, you can start by reserving approximately 10% of your monthly income for saving. As you progress, you can gradually increase this to 35% or so.

This is just an example. How you manage your savings depends on various individual factors. But it’s vital to increase your savings percentage with time for successful personal financial planning.

8. Diversify Your Investment

With time, you need to graduate from saving money to investing it. Savings give you a limited return. On the other hand, you can earn a considerable return on investments if you plan them accordingly. Investments are crucial for salaried people as inflation can eat on their limited savings.

Don’t put all eggs in one basket. Diversify your portfolio. Numerous investment options for salaried individuals exist in the market. Invest in both high-risk and low-risk investments to be on the safer side.

9. Draw Your Retirement Plan

One of your long-term financial goals has to be retirement planning. Several factors like your monthly income, expense, and lifestyle come into play to plan your retirement. So carefully curate a fund that will be sufficient for you to lead a retired life.

For example, suppose a person spending₹50,000 on monthly expenses wants to retire at 65. They need to invest in a SIP with a 12% return for 30 years to gather a sum close to 1 crore as a retirement fund.

Bottom Line!

These personal financial planning strategies help you save money and generate wealth with your salary! Keep these tips ion mind and make sure to remember that if you want to win the battle of finance, you MUST plan!

Author Bio:

Tanvi Kaushik specializes in Content Marketing and works with the Digital Team at KreditBee – India’s fastest personal loan platform where self-employed and salaried professionals can easily avail of personal loans in just a few minutes when in need of quick funds.
Tanvi writes to-the-point articles on personal finance and budgeting which are truly appreciated by her readers. She is committed to making money matters easy to understand even for the layman. Her commitment to her work doesn’t stop her from pursuing her hobbies of hiking, trekking and going on adventurous trips.

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