▣ Maintaining enough emergency fund
Risk can be minimized but cannot be eliminated. Hence, an emergency fund has become a necessity to reduce undesirable financial situations.
Therefore, it is advised to have at least 5-6 months' expenses as your emergency fund.
Risk can be minimized but cannot be eliminated. Hence, an emergency fund has become a necessity to reduce undesirable financial situations.
Therefore, it is advised to have at least 5-6 months' expenses as your emergency fund.
▣ Life Insurance
Having term insurance is just lyk planting a tree that gives shade to your family. There is only death benefit but no maturity benefit in this.
As soon as u start ur first job u should have term insurance & the cover should be 20 times ur yearly expenses
Having term insurance is just lyk planting a tree that gives shade to your family. There is only death benefit but no maturity benefit in this.
As soon as u start ur first job u should have term insurance & the cover should be 20 times ur yearly expenses
▣ 50/30/20 Budgeting rule
According to this rule, 50% should be spent on essentials like food & shelter, 30% on your want & luxuries like fancy dinners, EMIs etc.
Rest 20% should be strictly saved and invested for the future.
According to this rule, 50% should be spent on essentials like food & shelter, 30% on your want & luxuries like fancy dinners, EMIs etc.
Rest 20% should be strictly saved and invested for the future.
▣ Rule of 72
This formula is used by investors to estimate how long will it take for the money to get doubled.
U just have to divide 72 by the interest rate u will receive on the instrument.
For Eg. If the interest rate is 6%, it will take 12 yrs fr ur money to get double
This formula is used by investors to estimate how long will it take for the money to get doubled.
U just have to divide 72 by the interest rate u will receive on the instrument.
For Eg. If the interest rate is 6%, it will take 12 yrs fr ur money to get double
▣ 20/4/10 rule for your car loan
You should be able to pay at least 20% of the cost of a car as a down payment.
The tenure of your loan should not exceed 4 years
Not more than 10% of your in-hand salary should be allocated for repaying the loan & car insurance.
You should be able to pay at least 20% of the cost of a car as a down payment.
The tenure of your loan should not exceed 4 years
Not more than 10% of your in-hand salary should be allocated for repaying the loan & car insurance.
▣ 20/10 rule
This rule aims to help you live your life within your means.
U should make sure that ur debt by the end of year does not exceed 20% of ur yrly post-tax net income.
Also, the amt of ur monthly instalments should not exceed 10% of your monthly in-hand salary.
This rule aims to help you live your life within your means.
U should make sure that ur debt by the end of year does not exceed 20% of ur yrly post-tax net income.
Also, the amt of ur monthly instalments should not exceed 10% of your monthly in-hand salary.
▣ 35/45/20 rule for high debt
If your debt has piled up and you want to settle it as soon as possible, this rule is helpful.
35% should be spent on essentials.
45% should be used to settle your debt.
Remaining 20% should be saved & invested for your future.
If your debt has piled up and you want to settle it as soon as possible, this rule is helpful.
35% should be spent on essentials.
45% should be used to settle your debt.
Remaining 20% should be saved & invested for your future.
▣ 40/40/20 rule
You can also accelerate the process of wealth creation with this rule
40% you can save & invest for your future.
Another 40% can be used for essential expenses.
20% for everything else.
You can also accelerate the process of wealth creation with this rule
40% you can save & invest for your future.
Another 40% can be used for essential expenses.
20% for everything else.
▣ 100 minus age rule
By subtracting ur age with 100 u can get an asset allocation for ur investment.
For Eg. If ur age is 30, then u can do 70% of ur investment in equity & rest 30% in debt.
However, this might vary frm person to person depending upon the risk capacity.
By subtracting ur age with 100 u can get an asset allocation for ur investment.
For Eg. If ur age is 30, then u can do 70% of ur investment in equity & rest 30% in debt.
However, this might vary frm person to person depending upon the risk capacity.
Learn more such Personal finance hacks to improve your saving & investment styles through our Personal finance course on Quest - bit.ly/quest-personal…
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