Your yearly appraisal has got you a salary hike, and you have a bonus too. So, what do you want to do with the extra money? If you are confused, whether you should save or spend. Then the best option is to save or invest the money in a fixed deposit to make it grow. Before you are planning to take a vacation or making a big purchase, you should think of how this surplus money can make a change in your life.
For instance, no matter if it is a single-digit hike or a double-digit hike, if you have debts or loans that are piling up, then you also invest there to lessen your financial burden. Hence, we are going to discuss a few smart tips about how you can use your extra money in a better way.
Here are few tips to make the most of your pay hike
Enmark the extra amount
First of all, chalk out the amount that can afford to put out for savings. Then you can think of putting it in a fixed deposit or invest in other things.
Have a long-term plan
Don’t be short-sighted while making any decision because you should always think about the money you will need after ten years or more. Invest your cash in FD’s because they will surely give you positive returns. Apart from that, you can start a retirement fund and start saving for your retirement. If you have kids, then save money for their college. This can include anything from buying assets to starting a recurring account.
Decide what you want
You have to make a decision either you want a lump sum amount at once or steady cash flow. In case you are planning to buy a house in some years and want to save for the downpayment, then it is better to keep in cumulative FD. So, that you can get the amount at the end of the maturity period. On the other hand, if you want frequent payouts, then invest in a non-cumulative FD so that you can get payments quarterly, monthly, or yearly.
Make a target
Creating specific financial goals will help you stay motivated. To set a financial target, you can use an online calculator to calculate your FD mature value and tenure beforehand. Thus, you will get an idea of how long you need to continue investing in the fund. Further, you can also invest in flexible investment horizons so that you withdraw your payment anytime. Generally, there is a small amount of penalty fee, but the process is easy.
Simplify your investments
No one likes to keep a constant vigil on their investments that includes burdensome paperwork. Thus, choose an FD that suits your needs, and in case you fail to continue it, then close the FD and make a new one. Opt an FD that you can manage online and make online payments to ease the process of saving. Nowadays, most banks take minimal documentation process while creating FDs, and the whole process has become digital, so you need an internet connection to make an FD.
You can get assured returns from FDs, and your money goes faster in FDs than regular saving accounts as you worked hard to get a hike, so you should not waste your money. The points, as mentioned above, may help you to spend your money systematically.
It is always advisable to teach a good savings habit from as early as possible. We all struggle to save money and caught ourselves in debt due to overspending. We can only rescue ourselves and nobody else. The best way is to kick start with an investment plan. Fixed Deposit is a good investment plan for beginners. They are the safest and most suitable for risk-averse. Moreover, there is a guaranteed assured return which comes up at the end of the tenure.
Also, life is uncertain, and it is essential to save money. FD can act as an emergency fund. These funds can turn out to be very handy during the time of turbulence.
Money is a useful resource provided we manage it efficiently. Like a small seed sowed grows into a plant, on the other hand, the small sum of money can grow.
Savings and investment will make your life easy. Plan your investment and lead a stress -free financial life.
There is no harm in reiterating the things as the numbers need to match or maybe even higher than what you estimated for. A regular track of investment is crucial. A proper financial chart can help to save you from the last moment’s mistakes.
We all work hard to get the money, but we must all respect our hard-earned money and spend it cautiously. Wishing you all the very best and have a tremendous financial journey ahead.