You can earn from your big ticket spendings. Learn how

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Pooja Mehta, 36, pays a premium for her term and health insurance policies towards the end of the financial year. This is also the time of the year when her budget gets squeezed hard because of these big-ticket spendings. “I feel stressed towards the end of the year as all my big-ticket premiums get due around February. Moreover, considering it is a tax saving time I have to make some investments,” said Pooja. There are many others like Pooja who find themselves in a difficult financial situation towards the end of the year. But there is a way out. By simply planning your finances at the beginning of the year you can ensure a smooth sail without tightening your purse strings.

One of the best ways is to first understand how much money you generally require for your premium and lump sum investments. Divide this amount in equal monthly instalments and accordingly save that amount every month in an ultra short term fund. This way you will not only shell out for big expenditures but also earn a good return over a one year period. For example, over the period of one year. ICICI Prudential Ultra Short Term Fund and Aditya Birla Sun Life savings Fund have given a return of 7.7% and 6.5%, respectively.

Not only paying premiums, but you can also plan your lumpsum investments for the next year. This is because if you deposit the full amount of Rs 1.5 lakh in PPF at the beginning of the year (before 5th April) you get the maximum amount of interest for your deposit Consider this: If you deposit Rs 1.5 lakh every year at the start of the financial year, before April 5 each year, you will earn around Rs 2.69 lakh more than the investor who deposits at the end of the financial year. The maturity value stands at Rs 40.68 lakh if you invest at the start of the financial year (before 5th April). The same amount works out to Rs 37.98 lakh if the investments are made at the end of every financial year for the lock-in period of 15 years at an interest rate of 7.1 %.

Just by saving a small amount every month, you will be ready for big-ticket spending and investments towards the end of the financial year. You can save every month, earn a return and then withdraw the lump sum amount for future payments and investments.

Last but not least you can consider paying a premium through your credit cards. By doing so you will not only enjoy interest-free credit for one month but also earn rewards points on your cards, which can be redeemed later.