Page 39 - Banking Finance July 2023

ARTICLE

THE 3-I PRINCIPLE

FOR AN EFFECTIVE

FINANCIAL

PLANNING BY A

SALARIED

INDIVIDUAL

n the developing economy like India, the class which surprising for many and shocking for a few that despite an
I is impacted financially the most due to any slightest increase in their salary, how come there is no increase in
their savings. There are TWO reasons for this - the first
change in the economic climate nationally or globally
is none other than the middle class that too the
sufficient to hedge against the inflation rate - and the second
salaried segment. The reasons are many but one among reason being that the increase in income may not be
them is their ambitious approach for a quick change in their being that he is spending more than he requires, thinking
lifestyle and financial status. They always struggle for better that he deserves better lifestyle as his earnings have
prospects for their wards. A proper financial planning in increased. Whatever may be the reason- the inflation leads
place would make their dreams come true despite adversity. to less savings for future and ultimately leads to poor
It is the 3-I principle - the Three "I" are INFLATION -INCOME financial situation in future.
TAX -INSURANCE. This Article describes how to deal with
these parameters. To curtail this tendency, one has to chalk out the details of
his spendings-category-wise like rent, groceries, Petrol
The first I namely Inflation - means increase in the prices of expenses for daily travel, weekend eating out, holiday
various commodities over a period of time. It is quite travelling, etc. After this one has to check out the inflation
on each category. This exercise would tell where to cut the
expenses or postpone them for the time-being. This will help
About the author to maintain the same level of savings/Investments despite
an increase in the inflation in the economy. One has to
ESNB Srinivas prepare to set aside at least 25% of his income towards his
Assistant Professor (Senior Scale) future financial goals. Once this becomes a habit, the
Manipal Academy of Higher Education -
inflation does not bother much and the increase in the
BFSI - Bangalore Campus
income due to salary-hike automatically increases the
36 | 2023 | JULY | BANKING FINANCE