Overview
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Many salaried individuals have a small uptick in take-home under the new tax regime and process simplifications.
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This playbook shows how to redeploy that surplus to strengthen finances.
Step 1: Quantify the Surplus
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Compare FY 2024–25 pay slips under old vs new regime if applicable.
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Note standard deductions, rebates, and cess changes.
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Calculate monthly surplus to allocate (e.g., INR 2,000–10,000).
Step 2: Emergency Fund First
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Target 6 months of expenses (9–12 months for self-employed).
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Use high-liquidity instruments: sweep FDs, high-yield savings, liquid funds.
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Automate a monthly transfer until fully funded.
Step 3: Insurance Check
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Term life: 10–15x annual income; ensure nominee updated.
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Health: Family floater with adequate sum insured; add super top-up.
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Disability cover: Often overlooked; consider standalone.
Step 4: Debt Prioritization
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Clear high-interest debt first (credit cards, BNPL).
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For home loans, consider extra principal prepayments to reduce tenure.
Step 5: Systematic Investing Plan (SIP)
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Core: Index funds (Nifty 50, Nifty Next 50), flexi-cap funds.
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Satellite: Mid/small-cap SIPs if risk tolerance allows.
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Rebalance annually; stick to target asset allocation.
Step 6: Tax-Aware Choices
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If opting for old regime due to deductions, fully use 80C (EPF, PPF, ELSS), 80D (health insurance), and NPS.
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If on new regime, focus on simplicity; avoid tax-chasing products that don’t fit goals.
Step 7: Goal Buckets
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Short-term (<3 years): Liquid/ultra-short funds, FDs.
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Medium-term (3–7 years): Short-duration debt + balanced advantage funds.
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Long-term (>7 years): Equity-heavy allocation; NPS for retirement.
Step 8: Review and Automate
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Quarterly review for drift >5%.
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Automate SIPs, bill payments, and savings rules.
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Keep a simple one-page IPS (Investment Policy Statement).
Example Allocation (for a modest surplus)
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40% to emergency fund (until target met).
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30% to SIP (equity index mix).
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20% to debt prepayment.
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10% to skill upskilling/education.
Common Pitfalls
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Mixing too many funds; keep core to 2–4.
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Ignoring insurance.
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Reacting to market noise; avoid mid-course panic.
Call to Action
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Download the budget reallocation planner (Excel/Google Sheet). Need a personalized plan? Book a session.
