Today is 4th April 2024 and you got the notification 27, 227 rupees credited in your account. You are so happy.
Few days later you got a call from your friend who urgently need 3000 rupees. You said okay. But when you try to pay 3000 rupees, you realize that you have only 177 rupees You are shocked.
Unfortunately, you said no to him. You are regretting because of three main reasons. Number one, only 177 rupees left out of 27, 227 rupees. Number two, you don’t know how it vanished. Number 3. It’s only 22 days you got your salary and still 8 days left for your next payment and you don’t have money.
Relatable? I know most of the time or every time it happens with many of you. The problem is because no one had teach you how to spend money in a right way. Here you go.
Listen. First thing first you need to make sure you have to do is take amount of some money from your salary. How much salary to save?
Calculate your emergency fund, insurance, education fund, if you are looking to get your child education in good college, this can be optional if you are in your early 20s, wedding, or loan. I had talked about 5 things, right? Emergency fund and insurance are going to applicable for each and every one of you who are earning right now.
Rest three also but can depend on your responsibility. You know your monthly expense is around 50, 000 rupees. So, if you multiply it by 6, you will get around 90, 000 rupees. That is your emergency fund amount. And you know that your insurance premium is around 2, 000 rupees per month. So, you know that if you earn 27, 227 rupees, you can save at least 5, 000 rupees per month for emergency fund and 2, 000 per month for premium.
That means you got your answer how much salary to save. In this case, from 27, 227, you will put aside 7, 000 for emergency fund and insurance.
After watching this, you might be thinking, what about needs, wants, investing? Hold on, give me some time. Now, you are left with 20, 000 rupees and your monthly expense is 15, 000 rupees.
You will spend this remaining amount in needs. Needs such as utensils, grocery, rent, light bills, transportation, education, clothing, medical expenses and all this. Understand one thing, numbers will fluctuate each and every month depending on your consumption and the inflation over the period of time.
After doing this, you will left with 5000 rupees. Now, you need to invest some amount of money depending on which investment option you choose.
SIP can be good for any beginner in index fund. Disclaimer, do your own analysis before putting money anywhere. You can invest 2, 000 rupees out of 5, 000 rupees.
Now you are left with only 3, 000 rupees. Don’t think of to spend this remaining 3, 000 rupees in fancy earpods or taking phone on EMI or putting this money in any subscription. Strictly prohibited. Try to understand me. Keep some money in your account. You never know when you need money so better to have.
Now you will say everything was fine. We understood that once we get salary first we’ll put in emergency fund, insurance and rest of the thing if applicable. After that we will put money in needs and remaining amount of money we will split into parts. Investing and urgency.
But what about party, subscription or wants?
Listen carefully. Don’t you feel shame asking this question? I mean how? If you two know that you hardly have some money, how can you think of doing party or wasting money in subscription?
After clearing all above important tasks of putting money in emergency fund, paying premium, only doing expenses in nets, investing money, keeping aside some amount of money for urgency.
Now, if you have some amount of money left, you can do whatever you want. But, you’ll say, in 50 30 20 rules, they say to invest 30 percent of income in wants. Oh, come on, man. Stop following the crowd.
It is not necessary that what works for them will work for you. If you know that, you already don’t have money to invest, to survive, it is compulsory to put that amount of money in warrants just because that 50 30 rule or the influencer always said, you can’t do this. If you’re earning 10, 000, 20, 000, how you will be able to apply this rule? Just use your common sense.
Wait, wait, wait. If you don’t have money after doing all the important experiments and still you want.
To fulfill your wants, I have three ways for you. Number one, live it. Seriously, sacrifice for sometimes. Once you start earning more, you can then look for fulfilling your wants.
Number two, do side hustle. If you are so eager to watch that Netflix or buy your dream phone, do side hustle. And from that extra money, you clear the expense of wants.
Number three, increase your salary. Watch this video to increase your salary.