Financial Planning

How some people manage to increase their take come salary

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It is 28TH of the month, Rohan and Ria are not looking happy as they had a fight last night because Ria wanted to go for dinner but due to insufficient funds Rohan cancelled the plan.  By the end of each month, Rohan turns from riches to rags in spite of earning a good amount every month.

Riya seems very upset when their only child Pia screamed for a new toy and for that too Rohan said no. Riya asked Rohan in a huge distress, “Will we ever enjoy our lives? When will we have enough money to make Pia happy? All these questions were left answered by Rohan’s side.

Meanwhile, Rohan met Pranav the Planner, who asked Rohan about his problem. What Rohan replied, is the case with every other salaried individual? “My kid would scream for a new toy at the supermarket and my wife & I would plan to buy something new every time there was a sale! Which unfortunately left me with little to no money by the end of the month.

Regular monthly expenses such as rent, conveyance charges, grocery bills, maintenance costs, salaries of the house-help and cook, were and still are inescapable. Add to that the miscellaneous expenses that pop out of nowhere.

I just could not seem to escape this web of expenses.

So, I decided to follow the old rule. I started saving a fixed amount every month that I put into in the bank account and did not touch (unless it was an emergency). Whatever extra was left I spent on toys and other things that my wife & I thought were necessary.”

Pranav replied, “Achieving this wasn’t easy, though. You have to take some tough decisions and be disciplined in your approach to money management. Here is a look at what you should do to make sure that you have more money at the end of the month.”

Very often when you leave the house with a thousand rupee in your pocket but when you come back your pocket is empty. The worst part is that you have no idea where all the money goes! It’s like someone has sucked the money straight out of your pocket. To overcome this problem you have to make a monthly budget.

The best time to make a budget is at the beginning of the month – when your salary is credited to your bank account – because this can help you plan how much you will be spending that month, and on what.

Being aware of where your money was going make it easier for you to plan your finances better and subsequently save more.

Rohan asked Pranav, “What is your way of budgeting?

Pranav Replied, “My way of budgeting is simple; I list down all major expenses such as rent, electricity charges, estimated conveyance charges, EMIs, etc. Then I do a simple subtraction of my expenses from my income to arrive at how much money I would eventually be left with.

Like every other member of the salaried class, taxes are a huge concern for me. Personally, I have always feared March because I know that paying taxes will leave me financially tight for at least the next two months.

By saving on taxes I may not have made ‘additional’ money, but I do manage to save more.

I personally prefer investing money every month in ULIPs that, along with life cover, will eventually give me additional income a few years down the line. Premiums paid are tax-free under section 80C and returns are also tax-free under section 10(10D). My friends and family to have had good experiences with these products, especially with Edelweiss Tokio Wealth Plus.

I also believe insurance is important as it keeps our valuables and family secure with its comprehensive coverage options, protecting what matters most from a range of uncertainties.”

Pranav suggested Rohan do an additional job on weekends or freelancing can bring a lot of extra money. You have no idea how much you can enjoy pursuing your hobby that also gives your income a little extra push! All you need to do is identify a marketable skill of yours- such as writing, singing, researching, etc.- and find someone willing to pay you for it! After all, if you’re good at something, why should you do it for free?

There are a lot of ways to increase income. You may get an appraisal tomorrow or find a better-paying job. However, for the moment, taking smart decisions such as budgeting and saving-before-spending money has had a direct impact on your future by allowing you to save more money.

Finally, Rohan feels relax and now he can not only save his money but invest it and protect his family’s future by investing in plans like ULIPs.

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