Planning your Finances.

Start Early and Get Financially Wiser..

Many of us have grand plans for our first salary, but it’s rare for people to consistently set aside a portion of it as savings each month. I can admit that, initially, all of my extra funds went straight to my vacation plans. Now, there’s nothing wrong with saving for a holiday, but if we only put our money there, we miss out on wise financial planning. I realized this quite early and began following a simple personal finance rule: the 70-20-10 Rule.

Now, what does this rule say?

• 70% goes to covering monthly expenses..
  This includes essential costs like rent, electricity, groceries, food, and transportation – the basics. By allocating the majority of your salary to these needs, you ensure your essential expenses are covered. If you lead a minimalist lifestyle, you may not need the full 70%. Prioritize necessary expenses over desires.
• 20% is for savings. This portion is dedicated to saving for emergencies, building a holiday fund, and possibly making investments. Starting early with investments can help you secure a comfortable future and enjoy a luxury lifestyle in retirement.
• 10% is set aside for debt repayments.
  If you have financial commitments, such as monthly interest payments, this 10% should be reserved for this purpose. Before taking on any loans, make sure the monthly payments fit within this 10%, ensuring a harmonious month in terms of finances.

This rule is a straightforward way for beginners to get their finances in order and secure a stress-free future. So, grab a pen and paper, and do your math!”

-by Jayapratha Kannan.