Why not merely focus on making more, and continue like that? How to save and live within budget? Let’s talk about the first problem. Regardless of how good you are, your salary income would eventually hit a plateau. Compensation is based on value you bring to the table, and if you’re either underpaid or you’re paid, at best slightly above, your worth.
If you’ve quadrupled your salary in three years, this means you were probably underpaid or in the wrong type of work (where your projects was not of much value to your prior employer). On the other hand, inflation is real. It varies based on where you live, how your home is, mouths to nourish etc.; but also for a developing country like ours, money loses its purchasing power.
Be it considering kid’s schooling, or buying a flat, or planning travels, or medical costs – prices appear to grow up fast. Investment is to obtain to your financial goal, and stay of inflation ahead. Varsity first chapter goes into detail about this problem. Reason to discuss all these, is that you realize that investment is a necessity, not just a luxury.
There’d be occasions when your investment options would make you question why you’re taking a lot losses when you will be just leaving everything in bank or investment company accounts and focus on earning more. Always remember that you cannot forever work for money, there’s a clock on that. Investments and planning finances are essential.
Now, the second problem. You’re spending about 50-70k / month. I’m uncertain about your personal situation, but if you are one, unmarried, living on lease, no home loan, and no old parents who need to depend on you – this is a little high, even in metro cities. Not judging you; nevertheless, you often will go for a few evaluation into the past expenditures. In fact, going forward, categorize spendings into two categories – luxury and essentials. Lessen luxury spendings Then. You can not invest more if you fail to save more. Leave the 3L in bank or investment company.
That’s your emergency corpus (read the wiki on what this is, why you will need it etc.). You are able to put 1L out of this in a Liquid finance about, if you want. Or make an FD. But don’t spend money on resources that has some size-able risk or lock-in. It should be liquid as much as possible, and can be accessed at worst, within a day or two.
Your first financial goal should be creating a Debt / Fixed-income corpus that you can fall back on, in the event of a large medical emergency (you or your parents or anyone else in the family). Hospitalization costs are huge, and if you have health insurance even, insurance pays full claim.
You’d certainly have to pay something out of your pocket. And promises can be rejected as well. Make reference to next point about how to go about this. Every month, decide what you’d spend beginning of month. Try to not have to touch this amount for the whole month. When you can do this for approximately 6-7 months, you’d have built a habit of predictable saving. Not saying you mustn’t order food or eat out or watch movies or go on a trip – but saying it should be predictable & controllable.
- Invest in Cryptocurrency
- 20% International shares
- Total Expenditure (9+13)
- 5 years ago from Dausa, India
- Income from long-term capital gains
This habit is the first rung on the ladder to learning to be a good investor: have the ability to save increasingly more. In fact, as your salary or income increase, your expenses will most likely not increase at same rate; so you’ll only be able to save more, and steadily, make investments more. This preliminary 6-7 weeks would take one to a place where you’d have 4-5L by the end of the exercise.
This is a reasonably good medical emergency corpus. In this particular 6-7 months, it’s also advisable to sort out and plan your future finances, and what amount you’d need for each goal. Read a complete lot. Investment is complex, nuances of risks present in each kind of asset is complex, and taxes are more technical even.