4 Financial Things to Do After Your Performance Appraisal This Year

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Getting an appraisal after months of hard work feels great. Your salary increases, you get promoted and the time feels right for you to move on to bigger things in life and work. It all seems to work out for you.

With all the extra money in your bank account, you have options aplenty to put it to good use. Maybe go on that Goa trip or probably get an Xbox 1. While these propositions sound appealing, there is another way you can utilize the additional cash flow; this time to smoothen your financial life, lower your debt and invest in your future.

To help you utilize your appraised salary in the best manner possible, here are a few expert-suggested financial steps. Take a look.

Lower Your Debt


For someone who has an outstanding debt, the first step must be to repay that. Whether you should increase your debt re-payments or not will entirely depend upon the kind of debt you hold and its interest rates.

If you have high-interest debt, for instance, credit card dues, it is wiser to clear that debt.Debt like education loan or home loan need not be paid instantly, as you get tax rebates and their interest rates are not that high.

Start Early with Your Tax-Savings


Taxes account for a considerable chunk of money from your income every year. And while the government offers tax-saving options, it is often seen that majority of people start investing in these options just before the end of the financial year.

This approach towards tax-saving investment can be detrimental to your financial portfolio’s health. Blindly making lump sum investment in market-linked instruments is not the right choice as you might end up losing your money.

Therefore, it is imperative that you start investing at the start of a financial year. Moreover, to be on the safer side, you can invest in Unit Linked Insurance Plans or ULIPs.

Under ULIP insurance, you get an option of switching your funds from equity to debt according to your preference, allowing you to avoid the swings of the market. In addition, premiums paid towards ULIP insurance are eligible for tax deductions under Section 80C.

Build an Emergency Fund


It is never fun to think about emergencies that may need you to empty your savings account. However, it is essential. The building or enhancing your emergency fund is a vital part of your financial portfolio.

Your emergency fund acts as a protective wall that protects your savings while providing you peace of mind. It comes handy during a medical emergency, in case you lose your job, or you need some work done in your car. Most financial experts suggest that emergency funds must be enough to cover three to six months of your living expenses. ​

Contribute to Your Retirement


Using your appraisal to increase your retirement contributions, even just by a small margin, can have a dramatic effect on the stability of your financial future. Therefore, when you get a raise, you must contribute a little to make your golden years better.

One of the best ways to make sure that your retirement corpus is on its way is by investing in ULIP pension plans. ULIPs are a hybrid product that offers both investment and insurance option, therefore, allowing you to build a corpus while providing you life cover. The variety of fund options in ULIP insurance plans enable you to invest your money in high-yielding equity funds as well as low-risk debt funds.

Moreover, ULIP pension plan offered by reputable insurers like Max Life Insurance, do not require you to pay any administrative charges on your policy. Besides, you also get the option of making free switches from equity to debt funds.

Getting a raise at your job means you are excelling in your work and is a cause for celebration. However, it also calls for identifying new opportunities to enhance your financial security. Determining what to do with the raise can lead to long-term benefits and help you ensure that your extra cash provides you additional benefits.

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