Ground Report | New Delhi: 7 things to do with your money; Having a raise in salary is always very positive news for personal finances. If you have managed to get your company to increase your salary, you may wonder what you can do with that surplus of money. The planning changes completely and you will have room for maneuver with which you can play to have greater economic freedom, in addition to enjoying good financial health.
It is important that, even if you earn more money, you do not lose the basic notions of personal finances: from maintaining good saving habits, not spending more than what is entered, or controlling expenses. Do not go crazy, even if your situation has stabilized much more.
7 things to do with your money
Therefore, there are a series of tips that you should follow when you have increased your salary that can serve as a reference for making decisions. (7 things to do with your money)
- Reassess your personal finances
Of course, the first step that must be done with the capital is that you review the current financial situation. You earn more money, with which there are changes in your general economic scheme. Your net salary, your available budget and possibly your taxation to the Treasury are modified.
To start, you need to find out what your take-home pay is. Once you know it, you will be able to know how much taxes you have to pay. In addition, you have to review your debt and your savings goals, which can be revised upwards as you receive more money each month.
Wealth management experts then recommend that you determine what financial objective you would like to focus your annual increase on. This can translate to directing much of that extra income toward a specific goal.
- Cut your debts as much as possible
In this way, in order to avoid the high cost of borrowing money, you can take advantage of the fact that you earn more money to be free of charge. In this sense, there are many strategies around debt repayment. When you decide which is the alternative that best suits your needs, think about which option will help you achieve your goals.
3. Check your emergency fund
One of the methods that can protect us from debts or adverse financial situations is to have proper planning. In the event that you did not achieve your savings goal for your emergency fund before, consider using part of that increase to accelerate this segment that is destined to stop contingencies that may appear.
The emergency fund is a key point in personal finances. Some wealth advising experts advise that it be at least 3 times your monthly salary . Consider having that margin saved if you have not previously achieved it. (7 things to do with your money)
- Save for achievable goals
Since you have already reviewed your financial planning, it is important that you have set goals. Some of them may be in the medium term. Therefore, part of that savings should be used to achieve goals that you can achieve: from moving to a larger house to a new vehicle.
5. Increase contributions to your retirement plan
Beyond thinking in the short term, it is important that part of that surplus of money that you are going to earn is allocated to a broader horizon. The more funds you can set aside earlier for your retirement, the more time your savings will have to grow larger when you retire.
If you still do not have a plan designed for your retirement, the moment when your salary increases is ideal for you to start considering it. There are many possible alternatives: from pension plans, investment funds, securities portfolios, remunerated accounts. The important thing is that you allocate capital to long-term savings. (7 things to do with your money)
- Invest part of the money
Apart from the fact that saving is a method that must always be applied, one of the things that you should not miss is putting some of the money that you have managed to save to work. Investing is essential to obtain returns on the assets we already have.
Consider focusing on beating inflation, which is essential so you don’t lose purchasing power over time.
- Treat yourself
Last but also important, a raise is always a reason for joy and celebration. Set aside part of that salary upgrade to indulge yourself : a day at the spa, an intimate dinner, or a weekend getaway.
Just make sure you give yourself time to save up for a big purchase that is still within your budget.