Who don’t want to be rich? But what should be the most important thing to get rich.
Many people think that only business is the way to get rich and no one can become rich with a salary or regular income, but this is not true. If you see the satisfaction or in fact if you see around you, you’ll find many millionaires who are salaried class, why did they become rich? because they have a financial discipline. They had habits of saving money, investing regularly. Researching, and investing money in the right place.
We start our career, many personal finance experts recommend, to keep half of the salary for savings and investments. now salary in only Rs.15,000-20,000 and that’s not even sufficient for expenses, so how can I follow that? This is very true because youngsters need to fulfil their basic necessities, so because of this, youngsters don’t have start savings and investing habit, and it becomes so late to start this habit, that you don’t get the compounding effect you might have got, When you start investing early, your money gest multiplied each year, And that’s why rich is always rich, If you start saving and investing at the age of 21-22, you can definitely become a millionaire, you may take retirement 10 years before the one who will start investing 10 years later form now, Because you may have that much sufficient corpus amount, which can give you interest equal to your income 25-30 years later from now, so that’s why it is important to maintain discipline. How much can spend on wishes and wants.
If you just started your career then you have to follow this simple rule, which is the 50-30-20 rule of money,
you can spend 50% of your monthly income in your basic NEEDS. Now, what comes under basic needs? Rent or EMI, only consider the Rent or EMI of the house you’re living in, Besides that, food, transportation, clothing all these are obviously your basic needs, are the necessities in today’s time, and even some more basic necessities which are electricity, water, gas, phone, internet, all these are basic nowadays, you should decide your own basics, that these are my minimum requirements and I have to spend on these, but try to control the expenses on your needs.
After that, you can spend 30% of your monthly income in your WANTS, for car, vacation, banded clothes, expensive phone, laptop, but control it according to your income the maximum you can spend or save money for that, all these falls under wants and wishes, and you can decide how to spend.
After these, 20% of your income should definitely be reserved for SAVINGS and INVESTMENTS, now why do we do savings and investments?
Retirement planning is really very important, Education for kids, marriage, medical emergency funds, which you want to keep for future, so for all these, it’s very important to start savings and investments right from the beginning. Now, what are savings, opt for normal FD, Provident funds account, invest in stocks, mutual funds, real estate. There are many options, but discipline is very important. If as your income increases, you should increase the proportion of savings and investments. Change spends 40% NEEDS, 20% WANTS & 40% SAVINGS & INVESTMENTS.
