6 Financial Planning Tips for Salaried Professionals

Financial planning is required for every individual but it becomes more important for a salaried person who has a limited resource for generating income. Further, no matters how lucrative a paycheck is, the last few days of a month haunt almost every salaried person who hopes and prays that money creeps out from some unexpected places.

While financial planning helps individuals to manage different goals of life, a smart money management policy is the first step towards accomplishment of a bigger goal, such as home, and foreign trip. One has to proactively take steps to clearly understand various saving and investment patterns.

Being productive alone is not sufficient as one should also learn how to be efficient moneywise. The biggest benefit of salaried persons is that there is regularity in their flow of income. This feature can be used as a tool for planning systematically for future. As it is said, The early bird catches a worm, so start planning today for a secured future. This will take you an inch close to your financial independence.

Here are six financial tips that every salaried person should use.

1. Set your goals

You must have heard people telling you to do a lot of investment. They might give you 100 reasons for investment. However, what is your reason to invest? Every individual is different and so their need. A young professional who has just started a career, may invest for goals like a good house, to pursue an expensive hobby and holidays. If you are in the middle age- group, your goal may be to buy an insurance plan for the protection of your family , plan for children education, and their marriage purposes and for an easy retirement. Whatever be the reason, your purpose of investment must be very clear. Without knowing your goal, how can you plan to achieve it?

2. Manage your expenses

You cannot invest your entire earning as you need money to cover your daily expenses also. Money is something that you cannot cultivate. Obviously, you have to depend on your earning. It says, a person desire may be infinite but his wants are always limited. Whenever you think of a future goal that can be achieved with the investment, think about various modes and methods available for the investment and buy only those that have a great value in the future and affordable. No one bet on the dying horse.

3. Decide your budget

Stretch your legs as far as your blanket can go. You must have learned this proverb in your school days. It means, limit your spending to your earnings only. For a successful planning, you need a road map first. Deciding your budget means having a clear understanding of your earnings, spending, savings, miscellaneous expenses etc. You get a clear idea about the extent of investment you can do from your earnings and how can you stretch your spending. A budget would help you to spend your money judiciously achieve your financial goals.

4. Save as much as you can

Undoubtedly, saving is a good habit. The amount you save and the avenues where you save make you a smart saver. Overall, if you save by means that multiply your saving is always a smart move.

5. Diversify your investments

While investing, divide your investments  into liquid assets and fixed assets. Liquid assets like saving-account and small term investments give you freedom to draw money whenever you need, whereas, fixed assets is a reserve for your future goals.

6. Take adequate risk cover for life and health

Both investment and insurance are connected. While, investment helps you to save money for future, life insurance provides cover that helps your family during any unfortunate event when you will not be there for them. The amount of insurance depends on various parameters, such as your current income, number of dependents, and future goals. Equally prudent is to buy health insurance at the earliest. As you grow old, health insurance policy becomes costly. You can buy insurance policies online on a click of the mouse. However, make sure to compare different products before choosing the one.