How soon after your salary is credited do you find yourself ‘broke’? Salary day is one of the most awaited days. However, this is also when one might tend to overspend, putting their financial plan in disarray. With various online stores offering payday discounts, there is no dearth of lucrative options to splurge your hard-earned money.

Today, we will focus on how to manage your money better as and when your salary hits your bank account.

Do Not Fall Prey To Salary day Discounts

Multiple e-commerce and lifestyle platforms barrage your phones with push notifications during the last or first few days of the month. However, falling prey to non-essential and large expenses is detrimental to your financial planning for the month. Curb any impulsive spending on the very first day.

Prioritize Your Expenses and Investments

A tactical way of handling your salary is to schedule all payments, bills, essential expenditures, and investments before you begin your luxury expenditures. Most of us, especially those who have started new in the professional world, complain about not having enough money left at the end of the month as an excuse for not investing or inability to pay bills or EMIs.

What you end up with at the end of the month is a horde of penalties and zero investments. That’s where most of us find ourselves ‘broke’.

Assess your lifestyle and create a list of expenses based on priorities. If you have to pay rent, utility bills, and buy groceries for your house, these costs are more important and should be dealt with first. Other expenses can come in later.

A Personal Budget is crucial to your financial health

Budgeting is essential not just for central governments. Any individual/organization with a source of income needs to get into the habit of budgeting.

In simple terms, budgeting is just making a record of money flowing into your account and money flowing out of it.

If you have never created a personal budget, then try this activity:

Open an Excel sheet or create two columns on a piece of paper. 

    • In one column, start listing your income from all sources. This should include your salary, interest from term deposits, dividends on shares, etc. Do this for one year and include any quarterly or annual income avenues too. 
    • In the next column, list all your expenses. Divide this column into two parts:
      • Essential – this should include essential costs that cannot be avoided at any cost like rent, utility bills, etc.
      • Investments: your mutual fund investments, SIPs, fixed deposits, investment in shares, etc.
      • Luxury should include costs that can be avoided or reduced, like dining out, movies, shopping, etc.
  • You can now create a budget that allows you to optimize your income by controlling your expenses. Spend on luxury items from the salary left over after accounting for essentials and investments than doing the reverse.

Create An Emergency Fund

Having an emergency fund is essential since it ensures that your financial requirements are met if you lose your job, not receiving your salary for a few months for any reason, or any other unforeseen circumstances. The size of the emergency fund can vary based on your lifestyle and expenses. However, it is important to create an emergency fund and contribute to it every month. There are multiple ways to maintain an emergency fund. You can opt for mutual funds, bank deposits such as FD, and many other investment options depending on your risk appetite.

Handle Your Expenses Wisely

If there are bills to be paid, pay them on time. A delay can lead to fines/penalties. Most service providers allow you to automate monthly bills so that the money is automatically debited from your savings account. This ensures that all your bills are paid in time. You can also automate savings by opting for a mutual fund via SIP

Constantly Try To Settle Your Debt

If you have multiple debts like a credit card, personal loan, home loan, etc., you might want to consolidate them to reduce the overall interest paid every month. Most importantly, when the salary hits your account, keep your debts in mind and constantly try to settle them on a monthly/regular basis to lead a debt-free life in the future.

Understand your salary slip

While all of us know the exact salary we receive in our accounts, many are unaware of the deductions before the salary is processed. It is a good practice to know your salary slip through-and-through. Understanding your salary slip can help you make better investment decisions and even boost your income by using the benefits offered by your company. Hence, studying your salary slip is another important ‘tip’ for your payday.

Tax-Saving Investments

Hurried tax-saving investments can lead to making the wrong investments merely because the focus is on saving taxes and not taking effective investment decisions. Of the many investments, you plan from your salary, keep some space for tax-saving investments as well. Based on your tax bracket, plan your tax-saving investments and spread them across the year. This can help you make sound investments while saving tax money.

Key Takeaways

  • Your salary is limited, but the spending avenues are endless. Ensure that you avoid impulsive purchases on payday.
  • Budgets are not just for the country. Personal budgets can instill financial discipline and help use your money optimally.
  • Debts are unnecessary evils of our times. Try to settle them as soon as you can.
  • Use technology to automate savings and settle bills. Various mobile apps can help you budget and automate many processes.
  • An emergency fund should not be ignored. If anything, the recent lockdowns highlighted the need for one.


Q1. How do I determine the size of the emergency fund that I would need?

Usually, a sum equalling the living expenses of around three to six months is considered a good size of the emergency fund. However, it is important to assess your lifestyle and costs, profession, market conditions, etc., before making this decision. The core idea is to ensure that you have enough liquid funds to get you through most exigencies without having to break your investments.

Q2. If I plan taxes and investments, then I will not have anything left for leisure. How do I manage that?

Personal finance planning is about understanding your income and expenses and planning them so that you don’t miss anything important. However, it does not mean that you have to give up on everything. While you might have to reduce the frequency of leisure activities, the trick will lie in creating a budget that allows you to feel happy without straining your finances. Also, if you are skilled enough to budget your salary, investments, and expenses, you may not have to cut down on luxury a lot. It is all about smart planning.