Dos and donts when your salary hiked - Fusion - WeRIndia

Dos and donts when your salary hiked

Dos and donts when your salary hiked

Normally companies hike the salary of their employees in the beginning of the financial year i.e. at the month of April.

Some will pay the increased salary at the month end, and some would pay it as arrears along with next salary.

Compute your appraised amount over your previous salary to manage it properly. Use it to meet your financial goals if any. Also be clear about your take-home salary as often even if your salary is hiked, your take-home salary would not be increased to that extent. This is due to contribution to PF and others like a gratuity.

Also, remember that your salary hike may increase your tax liability.


Here are some dos and don’ts in the event of your salary hike:

Dos:

  • Assess your expenses to manage the funds effectively.
  • Evaluate your household budget. Focus on your loan repayment as well.
  • Set both short-term and long-term financial goals.
  • Build an emergency corpus fund to meet unforeseen expenses. This fund should meet at least six month’s requirements. In other words, it should be at least six times your monthly expenses.
  • Save at least 50 per cent of your increment. You can even save the entire amount if you have no financial burdens to meet immediately.
  • Improve your insurance cover. Also, invest some amount in retirement plans to lead a peaceful life even after your retirement.
  • Beware of taxes. Keep some amount in allowed savings to get tax exemption and avoid payment of higher tax.

Don’ts:

  • Don’t overlook yourself. The hike is given to you for the performance you have shown in the last year.
  • Don’t forget to invest the extra money you get in investments.
  • Don’t expect a similar hike in the next financial year also. So, use your appraised salary wisely and try to multiply it.

Image Reference: Goodreturns

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