Recently, the Union Cabinet approved the recommendations of the Seventh Pay Commission. After this, the salary of the employees goes up and they also have the money from the backlog in their hands. The Wages Committee has recommended an increase of 23.55 percent in wages and benefits and 24 percent in pensions for retired staff.
Since many people suddenly get money, they start making plans to spend it right away. In such a time, if you plan money wisely, there is an opportunity to get more benefits. This allows you to build up a long-term capital or pay off your old debts.
get out of debt
Pay off all T-card debts immediately. It attracts an interest rate of about 40 percent or more. Personal loan and credit card debt is the worst debt, it must be repaid first. If you have taken out a home loan, use a larger part of the arrears to repay the principal. A home loan is a good loan, but if you repay it early, your interest burden is less. Apart from this, if you have a debt, pay it off.
create emergency fund
Build an emergency fund for yourself. Keep it for use in an emergency. An emergency could come at any moment. Keep your 3 months salary in this fund. You don’t have to break your investment for this. However, there is less danger to the work of government employees. Therefore, you can use this money for sudden expenses. Put the money in a liquid fund or savings account.
If the government’s group insurance policy falls short, you can take out a term life insurance policy. Buy a term plan 10 times your annual income. Suppose if your annual income is Rs 6 lakh, then you need to buy Rs 60 lakh term life insurance. You buy term life insurance online, these plans are up to 25 percent cheaper than offline. When buying term life insurance, keep in mind that you only buy the cheapest plan for the sake of cheap. View the company’s claims settlement ratios. Only buy his term life insurance if the company has paid a reasonable amount in claims.
If the collective health insurance is less, you can buy a family floater for the whole family. If your age is between 25 and 30, buy a family floater insurance plan. It’s a good idea to buy a critical illness plan around age 40.
don’t rush spending
Think of investing your money when your debt is fully paid off and you are fully insured. If you have a plan to buy something big in your head, avoid it for now. You can put off decisions like upgrading your car or buying a diamond necklace for your wife. Remember, after deducting savings from income, what’s left should cover your expenses.
If you have created a financial plan, it needs to be revised. You need to make sure that your long-term goals are well identified and that sufficient amount of money has been invested for them. If not, start investing in 3 to 5 long-term equity funds. If you want to invest on a lump sum and avoid market volatility, invest through the Systematic Transfer Plan. STP works like a plan in systematic investing. With STP, the investor invests first in a liquid fund and then in an equity fund. In SIP, the advance is transferred directly from the investor’s bank account to the fund. If you want to invest 1 lakh, these are investments in liquid funds first. After that, a fixed amount is invested in equity funds every week or month. You continue to receive interest on the money that is still in the liquid fund. With interest rates falling, it’s time for investors looking to invest in FDs to take advantage of them. Those who already have SIP should increase the investment in them with this amount.
buy real estate
Real estate prices are stable in many cities of the country. The comparison of supply and demand is incorrect. If you are considering buying a property as an investment, stop now. In the current situation you can buy the house for your own use. First, choose the property for yourself and negotiate with the builder to lower the property price.
The government also plans to introduce a scheme to invest the amount received in the Seventh Pay Commission. Through this fund, capital will be given to banks in the public sector. Large government employees may be tempted by tax exemption and higher returns to invest in this scheme.
PPF option too
In addition to government banks, private banks today also offer the option to open a PPF account. If you are in stocks or mutual funds
If you don’t want to invest money and want a safe return, you can invest in PPF. You receive 8 percent interest in PPF. Many employees will end up in higher tax brackets due to wage increases. In such a situation, the Equity Linked Savings Scheme is also a good option for them.
Small Savings Plan Option
If you want to invest absolutely safely, invest money in FD. Apart from this, there are also fixed term plans, tax free bonds, NPS and post office plans. Check their interest rates before investing in small savings plans. The government is constantly evaluating their interest rates.
Get help from a financial planner
If you find it difficult to invest your money despite the many options, then engage a financial planner. If you haven’t created your financial portfolio yet, build it up with the help of a planner and invest accordingly.
Once you have money in your hands, there will be rain of many kinds of offers for government employees. In the rain of these offers, you have to be very careful because your savings will be useful to you in the future.