Teaching is a noble profession. It is calming and fulfilling. As a new teacher, it is natural to feel overwhelmed and get the jitters. After all, the responsibility of teaching is huge. Don’t forget to organize and plan your finances along with classes and lessons.
Start planning for short and long term finances. Would you like to just live from paycheck to paycheck or start planning for a better financial life? Don’t you want to take vacations? More importantly, don’t you want to lead a good retired life?
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Right, that’s a lot to think and execute. Take one step at a time. On looking back, you’ll have walked a long way to secure finances. This is how you can plan finances to achieve life’s goals:
It’s never too early to save. You might have just started your teaching career and retirement may seem too far away. Planning for retirement right now, will lead to financial freedom. Many retirement plans like EPF, PPF and so on, offer tax benefits.
With the Employee Provident Fund, a part of your salary is diverted to the EPF account. Over your working life, the EPF account earns decent returns at 8.55% a year (FY 2017-18). You can also track the account by using the UMANG app. These retirement plans make it possible for you to know exact retirement earnings.
A budget encourages you to save and spend in a disciplined manner. Collect and study spending patterns. Keep a check on the source and application of money.
Jot down your fixed expenses and variable expenses. Fix a figure for your weekly or monthly expenses. Stick to the budget.
Earn money, spend and then save. It’s common. Honestly, it’ll not work for long. Your initial months of earning and spending are ambiguous. But looking at your spending and saving patterns for a few months, helps correct your moves.
Though saving and investing are dependent on each other, there is a sharp difference between them.
• Saving is setting money aside for emergencies. If you deposit your savings in a bank account, you will get minimal returns.
• Investing leads to wealth creation. It is a systematic approach as to how you would like to invest money and earn higher returns on it.
So, pay yourself first. Automate transfer of a part of the salary to your savings account. Don’t worry about the quantum of savings. Even if you save as less as Rs 500 a week, start small. After a few weeks when you look back, you’ll have saved quite a bit of money.
Yes, financial emergencies come uninvited and demand a huge chunk of money. Therefore, it is important that you start saving for emergencies. You can either opt for the Fixed Deposit or the Recurring Deposit route. Simultaneously, start learning and investing in liquid mutual funds and debt funds.
You and dependents need money to survive. Therefore, you’re not responsible until you get insurance. Avail a term life insurance and health insurance plan.
A term life insurance plan makes sure your family doesn’t have to compromise on living standards in your absence. The earlier you avail term insurance, lower are the premiums you pay. The cost of insurance will be higher as you grow old. Say, you’re a 25-year old non-smoker. For a sum assured of Rs 50 Lakhs, you’ll have to pay an annual premium of around Rs 4,500. Monthly premium will be around Rs 400. If your annual income is around Rs 3 Lakhs a year, your premium will just be 1.5% of annual income. A great deal!
A health insurance policy covers unexpected hospitalization expenses. With medical inflation at 20% year on year, it is important to have a health insurance policy, even if you are fit and fine. Depending on the type of health insurance plan, you get coverage for critical illness, diagnosis and surgical expenses, hospital expenses, doctors’ fees and so on.
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