First things first, congratulations! You have been working hard, and it is always an amazing feeling when your hard work is appreciated. So, sit back and enjoy your moment.
Your responsibilities will definitely see a hike along with your salary now that you have been promoted. And, since you’ll be putting in 100% effort in your new role, you should also take a closer look at your finances and take some deliberate steps to increase your savings.
In this article, we shall look at some tips on how to effectively channel your salary hike to upgrade your financial objectives.
Understand your salary breakup
Go through your salary breakup to understand the difference between your previous salary and the one after the increment. This will help you identify the raise and what portion of it is subject to tax deductions.
If you have moved to a higher tax slab, increase your investments to retaliate against tax deductions. The extra money could also be used to pay off previous loans.
You could use the increment to repay previous personal loans or credit card debts. This will help you be debt free. But, if you have an existing home or education loan, don’t hurry to pay them off. As they can help you with tax rebates.
Another suggestion is to invest more; you could dedicate a part of your increment to opening an FD or RD account. SIP is also a good option to look at. This will help you achieve your financial goals easily. If you are concerned about your retirement days, the pay hike is the ideal time to invest in a retirement fund.
Open a secondary account
You could opt for a Kotak811 online zero balance savings account. It will be a handy way to park your buffer money in a bank account without the trouble of maintaining a minimum average monthly balance in the account. The digital savings account comes with added benefits like a complimentary virtual debit card to support your digital transactions and online shopping. The interest rate earned is up to 4% p.a. on the savings amount. Use this account to open an FD or RD investment and earn higher interest. The Kotak811 zero balance account also provides an instant credit card with a range of benefits and rewards.
Look for an emergency fund
It is essential to open an emergency fund, also known as a contingency fund. If you don’t have one, now is the perfect time to get one. Calculate your monthly household expenses and deposit that amount in an emergency fund. Try to keep at least three to six months’ salary in your emergency fund.
Take a vacation
Travel is food for our souls. So, go out and have some fun with your family. Look for a destination that attracts you; calculate the trip cost and create a travel fund. You could deposit some part of your incremented salary into the travel fund. Click here to start your travel fund savings. Once the capital is sufficient, you are good to go on a trip with your family.
You have worked hard to own this success. Use the newly raised salary to build a strong financial future.