PERSONAL FINANCE BLOG



 


In this personal finance blog, we explored practical strategies for optimizing a monthly income of 1,00,000 INR. The blog delves into the 50/30/20 rule, advocating the allocation of 50% for needs, 30% for wants, and 20% for savings and debt repayment.

The blog emphasizes the importance of creating a budget, building an emergency fund, contributing to retirement savings, and addressing debt obligations. The investment section suggests diversified options like mutual funds, fixed deposits, and stocks, enabling readers to tailor their approach based on financial goals and risk tolerance.

By following these guidelines, individuals can not only meet their basic needs and enjoy discretionary spending but also allocate a significant portion towards building financial security and wealth over time.

For a detailed understanding, be sure to explore the full blog post. Your financial journey begins with informed choices, and this blog aims to empower you on that path.

TOTAL MONTHLY INCOME: 1,00,000

  1. 50% for Needs (50,000 INR):
    • Rent or mortgage payments
    • Utilities (electricity, water, gas, etc.)
    • Groceries and essential food items
    • Health insurance and medical expenses
    • Transportation costs (car payment, fuel, public transportation)
  2. 30% for Wants (30,000 INR):
    • Entertainment (dining out, movies, concerts, etc.)
    • Non-essential shopping (clothing, gadgets, etc.)
    • Hobbies and leisure activities
    • Dining out or ordering takeout
  3. 20% for Savings and Debt Repayment (20,000 INR):
    • Emergency fund: Set aside a portion for unexpected expenses, aiming to build at least 3-6 months' worth of living expenses.
    • Retirement savings: Contribute to your retirement accounts, such as Employee Provident Fund (EPF), Public Provident Fund (PPF), or other investment tools.
    • Debt repayment: If you have outstanding debts (like loans or credit card balances), allocate a portion to pay them off. The faster you can reduce high-interest debts, the better.

Now, for investing the 20% allocated for savings, you can consider various investment options based on your financial goals, risk tolerance, and time horizon. 

  1. Fixed Deposits (FDs): Low-risk, stable returns, but typically lower interest rates compared to other investment options.
  2. Mutual Funds: Diversified investment funds managed by professionals. They can vary in risk and return profiles.
  3. Stocks: Higher risk but potentially higher returns. Consider investing in well-established companies or through mutual funds if you're new to stock investing.
  4. Real Estate: If you have a longer-term horizon and financial capacity, real estate can be a good investment.
  5. Systematic Investment Plans (SIPs): In mutual funds or other investment tools, allowing you to invest a fixed amount regularly.
  6. Gold or Precious Metals: Can act as a hedge against inflation and economic uncertainties.

Calculations for each category based on the 50/30/20 rule with a monthly income of 1,00,000 INR:

  1. 50% for Needs (50,000 INR):
    • Rent or mortgage payments: 15,000 INR
    • Utilities: 5,000 INR
    • Groceries: 10,000 INR
    • Health insurance and medical expenses: 8,000 INR
    • Transportation costs: 12,000 INR
  2. 30% for Wants (30,000 INR):
    • Entertainment: 7,500 INR
    • Non-essential shopping: 7,500 INR
    • Hobbies and leisure activities: 7,500 INR
    • Dining out or ordering takeout: 7,500 INR
  3. 20% for Savings and Debt Repayment (20,000 INR):
    • Emergency fund: 6,000 INR
    • Retirement savings: 8,000 INR
    • Debt repayment: 6,000 INR

Now, for investing the 20% allocated for savings:

  • You can distribute this among various investment options based on your preferences. For example, let's say you decide to allocate it as follows:
    • Mutual Funds: 10,000 INR
    • Fixed Deposits: 5,000 INR
    • Stocks: 5,000 INR



             Thank you for reading, and may your financial endeavors be prosperous and fulfilling.


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