We are just 9 days into the new Financial year. This is about time when the 'Financially Educated' plan their income allocation and tax structures so that they can reap the good results of their decision-making in the forthcoming year.
Now, "Financial Literacy" was a subject I often avoided in order to cloak my ignorance. But following Dr. David Schwartz's advice of "digging deep into the lesser known subject", I have now begun to enjoy this learning process. I am a fortunate soul to have people around me who are in good, stable stead to guide me through the financial-ignorance backwaters.
Given below are some tips, straight from the Teacher who I think is the biggest Financial Wizard I know in personal capacity. These tips are very basic ones, and are more like a gentle general reminder so that one can stay financially strong in the coming times.
Here we go:
1. We all should save minimum 40% of our income.
2. We should keep 6 months expenses as an emergency fund.
3. Minimum 20 times of our yearly income should be our retirement fund.
4. Cost of our house should not be more than 6 to 8 times of our family annual income.
5. EMI should not be more than 35% of our gross monthly income. ZERO IS BEST ANSWER.
6. We should have minimum Mediclaim of 5 lakh.
7. Life cover should be Minimum 10 times of our yearly income. Ideal and cost effective is to take term plan.
8. Ideally 65 to 70% of our income should go for creating appreciating assets and rest for consumption. This will help ease pressure on us as we age.
9. Rate of returns should ideally beat inflation.
10. Rule of 72 & 115 :
How many years double or triple our money ?
* 72/Returns= double in yrs
* 115/ returns = triple in yrs.
Now, "Financial Literacy" was a subject I often avoided in order to cloak my ignorance. But following Dr. David Schwartz's advice of "digging deep into the lesser known subject", I have now begun to enjoy this learning process. I am a fortunate soul to have people around me who are in good, stable stead to guide me through the financial-ignorance backwaters.
Given below are some tips, straight from the Teacher who I think is the biggest Financial Wizard I know in personal capacity. These tips are very basic ones, and are more like a gentle general reminder so that one can stay financially strong in the coming times.
Here we go:
1. We all should save minimum 40% of our income.
2. We should keep 6 months expenses as an emergency fund.
3. Minimum 20 times of our yearly income should be our retirement fund.
4. Cost of our house should not be more than 6 to 8 times of our family annual income.
5. EMI should not be more than 35% of our gross monthly income. ZERO IS BEST ANSWER.
6. We should have minimum Mediclaim of 5 lakh.
7. Life cover should be Minimum 10 times of our yearly income. Ideal and cost effective is to take term plan.
8. Ideally 65 to 70% of our income should go for creating appreciating assets and rest for consumption. This will help ease pressure on us as we age.
9. Rate of returns should ideally beat inflation.
10. Rule of 72 & 115 :
How many years double or triple our money ?
* 72/Returns= double in yrs
* 115/ returns = triple in yrs.
11. 100 minus our age should be our equity allocation. It is the best asset class in the world.
Of course, there is no magic formula that can make you rich overnight. It s a matter of diligence, patience and conscientious effort. And many more of such things. :)
But then, as is rightly said, "Well Begun is Half-Done"!!
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