As a working professional with a family, your salary will be fixed. There are bound to be many fixed expenses that you have to incur every month. While you can draw up the total cost, there are also chances of sudden expenses for which you need to be prepared. The basic list will contain your utility bills, insurance premiums and monthly grocery costs, and if you can maintain that list in actual, the other aspects of saving as against the total salary can be handled efficiently. Prepare your budget with a figure that exceeds your fixed costs and is lower than your salary, which will ensure that you can save effectively.
Savings account and investments
In addition to your checking account, it is a good idea that you also open a savings account. This will ensure a monthly or yearly interest which in turn ensures that you can meet sudden expenses. In your budget include an amount that you will contribute to your savings account on a regular basis. If your buffer amount and interest on the savings account are high, try to make investments in the stock market and other mutual funds. If you apply thought and also take assistance of professionals, the returns on these investments can be quite high. Though the returns will be realized in the long term, a lump sum amount of money will be available to you after some years.
Reduce utility bills
Your innovative ideas can help you save a substantial amount of money on your utility bills. The advents of home appliances that use very low energy have become very popular today. Lights and fans and kitchen appliances use very low energy, which in turn will reduce your electricity bills. Using solar plates on your roof will again reduce your energy consumption in the long run and you will be able to save more. Such measures may seem to be unrelated, but they can contribute greatly to your overall financial management. Look around your house and check if you can substitute certain appliances with eco-friendly ones. Not only will that measure reduce environmental damage but also ensure your savings.
Get a life insurance
Apart from your car and home insurance, think about a long term insurance plan for you and your family’s life. Returns are quite high in insurance policies, and they will ensure a good sum of money that you will receive at a time when you will need it the most. Many insurance companies provide schemes that entitle you to returns every few years. The best thing to do is to have a long-term policy and a couple of short-term policies. When your house and car loan payments are going to end, you will be in a better position to figure out how to re-invest the money saved.
Your mortgage repayment bad credit installment loans amount will contribute to a reduction of your taxable income. There are many other ways of reducing taxable income. For example, if you are married your taxes will decrease substantially. In addition, having children also reduce the taxes. Though this calculation varies across states, your savings will be substantial. Use the year-end incentives from your workplace effectively to contribute to charity as this ensures further tax benefits. In short, analyzing your lifestyle and saving money for future benefits is the key to personal finance management.