To Lead a Comfortable Life; Follow These Simple Thumb Rules

Everyone wants to be Financially Free, but due to the rising inflation and family responsibilities; Saving money is not possible for everyone.

But to lead a comfortable life , one must balance the current income and expenses and save for the future. If you didn’t save today, your future will be in danger. So to lead a decent and comfortable life, you have to “Minimise Your Expenses” and “Maximise Your Savings”

To save money, follow these simple thumb rules-

  1. The 50:30:20 Rule – The First thing to have to do is allocate your income between 50% for your needs; which you can’t compromise on;30% for your wants- which you assume to be necessary, but can avoidable for some days/months;20% for your savings and investments

But due to rising Inflation, one must alter this thumb rule to some extent-50% for needs,30% for savings/investments,20% for wants. It would be better if you alter this thumb rule to combat inflation

2. Delay Your Want for 1 Week– If you are enthusiastic to purchase various items; once the thought comes in your mind; Try to delay your want for “1 Week”; if you still want that item after 1 Week, buy then; But be within your purchasing power, don’t overspend

3. The 3 X Emergency Rule– Set aside 3 months of expenses as “Emergency Corpus”. This would be helpful in case of emergencies like job loss, hospitalisation, buying medicines etc

4. The 8% Investment Rule– In India the inflation is in between 7-8%. So your investments should earn more than 8% returns to beat inflation. If your investments are earning 5-6%(FD Interest Rates, as of now)you are becoming “Poorer” in terms of inflation. So choose investments which earn more than the inflation rate.

5. The 3% Yield Rule on Property– If you have an property let’s check whether it is giving 3% Yield per annum. For example, if you give some portion of your house to rent, the rental income must earn 3% of property value/annum

6.The 30% Home-Buying Rule– If you are looking to buy a house, you must set aside “30%” as “Down Payment”. If you set aside 30% of the property value, you are eligible to take housing loan and are able to pay your EMI’s without any default

7.The 10% Retirement Rule– You should set aside 10% of your income for retirement from your 1st salary. As your salary increases, increase the contributions year-on-year. This rule is “Must and Should” to every income-earner.

Starting saving for retirement at an young age and by increasing the contributions as the years passby, you will create a huge corpus for retirement.

To lead a comfortable life, one must follow these 7 Thumb Rules and enjoy the future with your savings.

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