Financial planning for salaried employees largely depends on their standard of living and family responsibilities. It is a well-organized task to manage your salary or income, as soon as you start earning it. However, due to some predefined obligations, salaried professionals tend to spend a major portion of their salaries in the first few days of the month. Eventually, this leads to a money deficit that reduces the savings in the later month. We understand that the outcome of your hard-earned money should be lucrative. Therefore, financial planning is the most efficient technique to get the desired results and makes monthly money management feasible. Follow the below-mentioned measures to manage your finances in an efficient manner:

Effective Financial Planning Measures for Salaried Employees

Prepare Monthly Budget

This is the foremost step in your financial planning process. You should prepare a monthly budget of your expenditure in the form of writing or save it as a draft. To simplify it further you shall follow the 50-30-20 Rule. This rule implies that you need to spend 50% of your monthly income on your needs, 30% toward wants, and 20% for savings. You can categorize your financial goals into three:

• -Needs
• -Wants
• -Savings

Needs 50%: Needs are mainly fulfilled by paying for groceries, rent, utility bills, EMIs, healthcare essentials, etc.

Wants 30%: By paying for shopping, eating out, parties, vacations, hobbies, subscriptions, etc.

Savings 20%: The balance 20% of your monthly income should go toward your savings.

Avail only necessary credit

You should avail credit for the exact amount, as required and do not over exceed it, as it may lead to overspending and later regret. Avail specific credit cards as per your utility and not just to enhance the monthly credit limit. Before opting for any credit product, it is recommended to check your credit score from one of the leading online platforms, such as the Paisabazaar platform to know the possibility of clearing the defined eligibility criteria and availing loan or credit card. A low credit score may reduce the possibility of availing credit that can further hamper your financial planning.

Opt for Insurances

Salaried people are more vulnerable to unforeseen circumstances, such as sickness, illness, accident, death, etc., as they need to have cash upfront to overcome these situations. Therefore, first, you need to avail insurance to cover yourself and your family against these unpredictable times. Your salary should also contribute towards the health and term insurance for you and your family. Insurance saves you from facing disasters and provides you a sense of security.

Investment Planning

Setting goals for yourself is equally important as setting financial goals. There are three categories in which you can plan your financial goals, such as short-term, medium-term and long-term. Short-term goals can be considered as goals that you want to achieve in the next 5 years, medium-term in 5-10 years and long-term goals in 10 years or above. Setting goals helps you achieve them by opting for appropriate investment products and allocating the required funds. Find below various types of investment products offered to secure your financial future:

• -Fixed Deposits
• -Bonds
• -Mutual Funds
• -Stocks and Shares
• -Assets (Real Estate)
• -Public Provident Fund (PPF)
• -National Pension System (NPS)
• -Unit Linked Insurance Plan (ULIP)
• -Senior Citizens’ Savings Scheme

Retirement Planning

This is considered as an important step of financial planning that helps you in your old age. Financial planning is needed to ensure financial freedom that can help in your early retirement. Retirement planning depends on your present age and expenses after retirement. Retirement planning shall depend on the age when you want to retire. Experts recommend that your retirement funds accumulation should be 20 times your current annual income. Plan your retirement by investing in long-term SIPs and NPS for better returns.

Why is Financial Planning Important?

Financial planning is not just about investing your hard-earned money; however, it is all about what your income can do for your financial security, quality of life and overall satisfaction. Financial planning is equally important for your personal, as well as professional life. By making it a habit you can gain capital growth and reduce overhead costs.

Types of Financial Goals

Some of the financial goals include the following:

• -Owning a home
• -Purchasing a property (For rental/commercial purposes)
• -Investment planning
• -Preparing a retirement plan
• -Children’s marriage
• -Planning a vacation
• -Resolving all types of debts
• -Settling loans and credit cards dues
• -Paying education fees
• -Starting a business

Useful Message:

Besides all the discussed measures of financial planning, it is advised to create an emergency fund to deal with uncertainties, such as job loss, debts, natural disasters, and various other economic crises. Emergency funds should be unlocked in absolute dire circumstances; otherwise, it shall be of no use.

By now, you shall be ready to efficiently create a financial plan to secure yourself and your family to further lead a stress-free and stable life.