Your salary goes up, so why aren't your savings? How 'moneymaxxing' fixes lifestyle creep

Your salary goes up, your spending follows. And somehow, your savings do not rise with the hike in salary. That is where moneymaxxing comes in.

The idea of moneymaxxing is not new. Budgeting, investing and saving have been around for years. Moneymaxxing simply puts them under one label.

To put it simply, moneymaxxing is making better use of your finances.

For salaried individuals, the real challenge isn't learning the jargon, but knowing what to optimise first.

Start with cash flow

Shweta Shastri, CFP and founder at Finnora Wealth Studio, says the first step is knowing where your salary goes. Track income, expenses, EMIs and savings before deciding how much you can invest. But don't focus only on cutting costs.

“Your salary is your biggest asset,” the CFP says.

Got an extra ₹10,000? Check this first

Before investing a salary hike or bonus, look at your emergency fund. If you don't have at least three months of essential expenses set aside, build that cushion first.

Next, tackle expensive debt. “If your personal loan or credit card is charging 15-20% interest, the cost of the debt may be higher than the return from your investments,” the CFP says.

Don't invest just to save tax

Under the current new regime, salaried individuals get a ₹75,000 standard deduction. Eligible resident individuals with taxable income up to ₹12 lakh can claim a rebate of up to ₹60,000, subject to applicable rules.

For those who benefit from the old regime, options include eligible 80C investments, HRA, home-loan interest, health-insurance deductions and NPS contributions.

Employer NPS can also be valuable. Under applicable rules, employer contributions can qualify for a deduction of up to 14% of basic salary under the new regime.

“Tax saving alone isn't a reason to buy a product. Look at returns, risk, lock-in, liquidity and charges before investing,” said CA Abhishek Soni.

Your salary structure matters too

Employees often focus on CTC and take-home pay and overlook the benefits their employer offers.

Abhishek suggests checking employer NPS, HRA, LTA/LTC, health insurance, company car or lease arrangements and other benefits, depending on the employer and applicable tax rules.

“Don't just negotiate your salary, optimise your salary structure,” he says.

After debt, where should the next rupee go?

Ronak Morjaria, Partner at ValueCurve Financial Services, says the answer should start with the goal, not the investment product.

For a goal six or seven years away, he says a larger share could go into equities through mutual funds, depending on the investor's risk tolerance.

For a three- or four-year goal, he prefers more debt through fixed deposits or short-term debt funds. Investors comfortable with some additional risk could consider equity savings funds.

In short, match the investment to the goal.

Money needed in three years shouldn't be invested the same way as retirement money.

Morjaria says investors should look at their overall asset allocation instead of trying to pick one “best” product.

So what is moneymaxxing?

“Moneymaxxing is a modern internet term for the deliberate pursuit of better financial outcomes,” says Anuj Gupta, a SEBI-registered Research Analyst.

For Gupta, it goes beyond investing. It means looking at what you earn, spend, save and invest, along with debt, taxes and the skills that can help you earn more.

Moneymaxxing may be the latest social money trend, but the core ideas behind the buzzword are not new.