Page 27 - Insurance Times December 2022

The 3-I principle for

an effective

Financial planning

ESNB Srinivas
by a salaried Assistant Professor (Senior Scale)
at Manipal Academy of Higher
Individual Education -BFSI - Bangalore
Campus

Once this becomes a habit, the inflation does not bother much and the increase in the income
due to salary-hike automatically increases the savings for the future financial needs like children
education/marriage or leading a happy retired life.

n the developing economy like India, the class which is To curtail this tendency, one has to chalk out the details of his
I impacted financially the most due to any slightest spendings-category-wise like rent, groceries, Petrol expenses
for daily travel, weekend eating out, holiday travelling, etc.
change in the economic climate nationally or globally
is none other than the middle class that too the salaried
segment. The reasons are many but one among them is their After this one has to check out the inflation on each category.
This exercise would tell where to cut the expenses or postpone
ambitious approach for a quick change in their lifestyle and them for the time-being.
financial status. They always struggle for a better prospects
for their wards. A proper financial planning in place would This will help to maintain the same level of savings/Investments
despite an increase in the inflation in the economy. One has to
make their dreams come true despite adversity. It is the 3-I
principle - the Three "I" are INFLATION -INCOME TAX - prepare to set aside at least 25% of his income towards his
future financial goals. Once this becomes a habit, the inflation
INSURANCE. This Article describes how to deal with these
does not bother much and the increase in the income due to
parameters.
salary-hike automatically increases the savings for the future
The first I namely Inflation - means increase in the prices of financial needs like children education/marriage or leading a
various commodities over a period of time. It is quite surprising happy retired life.
for many and shocking for a few that despite an increase in
The second "I" represents how to use the relevant Income
their salary, how come there is no increase in their savings.
Tax provisions for better financial planning. For this he should
There are TWO reasons for this - the first reason being that
know various Income Tax Provisions applicable to the salaried
the increase in income may not be sufficient to hedge against
class to reduce the tax liabilities.
the inflation rate - and the second being that he is spending
more than required, thinking that he deserves better lifestyle
The presement tax rates as per the old regime is as
things as his earnings have increased. Whatever may be the
follows:
reason- the inflation leads to less savings for future and
ultimately leads to poor financial situation in future. The TAX rates (old Regime)
The Insurance Times December 2022 23