How do you spend your time in the month ends? More work at office, less time for your family and of course a shortage of cash. Following the recommended course of action suggested by these articles will definitely help you to be wealthy and happy. But creating that space may require a little more time and of-course a disciplined approach. However this shortage of cash at the month ends may be fixed up if you follow the actions suggested in the following write-up.
Let’s discuss about the basic tenet of creating this additional money flow. We would look at every possible way to make sure that your money earns that extra bit. Remember that the ocean is made up of small but countless number of water drops.
Never keep your short term fund idle
We always need to maintain a certain level of ready cash. The amount of cash to be maintained may vary from person to person depending on their transaction and contingency needs.
One of the primary ideas is to avoid parking a large part of your short term surplus cash in a savings account. The savings account pays an interest, but the interest you will receive is generally lesser than the rate at which your money is losing its purchasing power because of inflation. . Let’s take example of your salary which entirely gets credited to account in the beginning of the month. Expenses, on the other hand is spread over the month: therefore a part of the salary proceeds remains idle during the month. If you can park this money in the cash funds (popularly known as liquid fund) – we may earn a better return than if we keep it idle.
This is also applicable to corporates where transaction money remains idle. The business here can use these liquid funds to earn that extra bit.
Know more about Liquid Funds from SBI Mutual Funds
Creating a regular source of income for your regular expenses
There are certain regular expenses you can’t ignore. Paying pocket money to your kid is one such expense. One option is paying him from your current income. But isn’t it difficult to keep track of it this way. Also you would like to make your kid financially more responsible. Here you may use a MIP (Monthly Income Plan), whose primary objective is to provide a regular income to the investor. The steps you need to follow here are:-
- Decide the average amount of monthly pocket money you wish to give to your kid
- Calculate the lump sum which will generate a cash flow equal to this pocket money
- Invest the lump sum in a Monthly Income Plan (MIP). Know more about SBI Magnum Monthly Income Plan
- Get regular dividend, which is allocated to the child
This way you save the regular hassle of keeping track of child expenses as well as make your child a financially literate citizen.
The same idea may be used for generating a cash flow for your parents or for any other near and dear ones.
Know more about SBI Magnum Monthly Income Plan
Get yourself a yearly bonus
Who won't like a fat yearly bonus? And think if it doesn’t depend on your employer. You may use this lump sum in so many ways: it can be used to enjoy more during the festive seasons, for that yearly family trip you always would like to take or for buying a new set of furnishing for your home. An investment in MIP can do the trick here without hampering your regular budget. Cumulate your monthly dividend in a liquid fund – and then take it out in lump sum. You will really enjoy the magic of creating and then paying yourself the big fat bonus.
Another alternate here is to use the Income Fund. This you would prefer if you wish a smoother ride. You may get a little less here but then you get it extra – remember. What you need here is to invest your money in the Income Fund and then take a yearly dividend. Sounds interesting – it is interesting indeed.
Know more about SBI Magnum Monthly Income Plan
A monthly paycheck after you retire
The whole discussion of passive income doesn’t end without considering the retired phase of your life. No more monthly pay check from your employer or from your business. Does your expense stop? No – but then an investment in MIP will ensure that pay check do not stop coming. And you enjoy a financially free and truly rewarding life.
"The main difference between the rich and the middle class is that the rich invest their money in passive income streams. When their passive income exceeds their expenses, then they are financially free. Financially free simply means that you do not have to have a day job to pay your expenses. And you are free to then do whatever you want!"
Robert Kiyosaki in Rich Dad Poor Dad
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