Why Half Of Your Salary Raise Should Go Towards The Future?

An annual increment brings in ample of joy and excitement. There are multiple ways to spend your salary hike. You will want to first reward yourself with the things you love which could be buying new gadgets or planning a vacation. There’s nothing wrong in rewarding yourself for all the hard work you do however it is also important that you set aside at least half of your annual increment for the future. In other words, save and invest it wisely.

Saving and investing is done for your future financial goals and needs, some needs could be a few years from now and some could be a decade or two away.

A salary increment will improve your present lifestyle. Let’s say you wish to commute comfortably and so you look at buying a new car. Your lifestyle will upgrade according to your salary increment.

Apart from upgrading your lifestyle, a hike in your salary can help you reach your long-term goals faster by investing more.

Maybe, you would like to start your own business or buy a new house. If you’ve already started investing to achieve these goals then your increment can help you get there faster.

You need to balance between your present lifestyle and your future goals. Therefore, 50% of your salary hike should ideally go towards making your present lifestyle better and the remaining 50% should go towards reaching closer to your future financial goals.

Most of us may not have enough to save for all financial goals at the same time, the following order can help you set your priorities. Firstly start saving for emergencies, secondly look at planning against financial contingencies and thirdly look at investing for your long-term goals.

This 50-50 financial planning for your long term and short term goals will help you manage your expenses and never compromise on your dreams.

So begin today, because every tiny drop counts and contributes towards building a mighty ocean.

Swati Tumar - Travel & Finance Writer   

Swati is a Writer in the day and an illustrator at night. Among her interests, she is quite fond of art and all things creative. She often indulges herself in creating doodles, illustrations, and other forms of content. She identifies herself as an avid traveler and shameless foodie.