How to manage personal finances
How to Manage your finances
Highlights:
1.Cash flow 2.Protection 3.Investment
1. Cash Flow: We Need to Do the Percentage (%) Distribution of Expenses First.
- Needs -- 50% from the income.
- wish—30% from the income.
- Savings—20% From the Income.
NEEDS
Separate 50% of the income for all primary needs. This includes food,
Clothing & Shelter
Make sure the primary needs do not exceed more than 50%.
WISH
The next 30% you can allocate for your wishes. For example, Buying the new things
you want, but remember one thing the limit should not exceed 30%. If that 30% is not used, then the funds can be allocated for savings.
SAVINGS
First, everyone should separate 20% of their income. then only allocate for Needs & Wishes,
Try not to use 20% of savings funds. Saving funds will be used for the next step.
2. Protection
NEEDS
Separate 50% of the income for all primary needs. This includes food,
Clothing & Shelter
Make sure the primary needs do not exceed more than 50%.
WISH
The next 30% you can allocate for your wishes. For example, Buying the new things
you want, but remember one thing the limit should not exceed 30%. If that 30% is not used, then the funds can be allocated for savings.
SAVINGS
First, everyone should separate 20% of their income. then only allocate for Needs & Wishes,
Try not to use 20% of savings funds. Saving funds will be used for the next step.
The next step is the allocation of funds for Protection.
The protection fund is obtained from 20% of the savingsthat we set aside each month.
If the Savings fund has reached 6x of salary,Then only we can go for the protection.
Various Kinds of Protection
- Insurance Fund.
📌Insurance Fund :- There are many insurances in the market but majorly 2 insurances Important for the fund management & Life
1. Health Insurance :- Minimum policy should be 10 lakhs & above for the entire family.
Why It Is Important—Covers Hospitalization. Medical expenses, surgeries, day care & pre- and post-hospitalization costs.
2. Term Life Insurance: Provides a lump sum payout to the family if the policyholder dies unexpectedly.
Min coverage should be 1 Crore—especially if purchased at a young age
E.g., 1 CR covers 500 to 1000 per month in your 30s.
📌Emergency Fund :- Emergency Funds that must be available to be safe, at least 3x our income each month
An emergency fund handles unexpected and urgent expenses without affecting your regular savings or forcing you into debt.
It Covers :- Job Loss Or Income Disruption
Medical Emergency (Beyond Insurance Limit)
Major car or Home Repairs
Emergency Travels
Temporary loss in business income
Medical Emergency (Beyond Insurance Limit)
Major car or Home Repairs
Emergency Travels
Temporary loss in business income
Investments:- Investment is allocation of money into assets.
1. Mutual Funds 2. Stock Market3. Real Estate 4. Gold (Digital & Physical)5. PPF (Public Provident Fund)
1. Mutual Funds
2. Stock Market
3. Real Estate
4. Gold (Digital & Physical)
5. PPF (Public Provident Fund)
