Money Saving Tips: As the new year approaches, most people resolve to manage their income and expenses better. However, with rising inflation, EMI pressure, rent, and future uncertainties, it’s not easy to figure out how to do proper financial planning. Finance influencer Ankur Warikoo answered this question in a recent YouTube video, explaining it in very simple terms. He says that if you can strike a balance between income, expenses, savings, and investments, money-related stress will automatically reduce significantly.
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How to Achieve Balance Even with a Low Salary
Ankur Warikoo used the example of a monthly salary of ₹30,000 to explain his financial rule. He believes that regardless of the salary amount, financial stability can be achieved if expenses and savings are determined in the right proportion. This rule is especially beneficial for those in the low or middle-income group who struggle with their budget every month.
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An Easy Formula for Determining Rent
According to this financial rule, you shouldn’t spend too much money on rent. Ankur Warikoo says that your annual rent should not exceed two months’ salary. If your monthly income is ₹30,000, then your annual rent should not be more than ₹60,000. This means that the monthly rent should be around ₹5,000. This prevents a large portion of your income from being spent solely on rent, leaving money for other needs.
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Ignoring Savings Can Be Costly
According to Ankur Warikoo, savings are not an option, but a necessity. Under this rule, every person should save at least 20 percent of their monthly income. For a salary of ₹30,000, this amounts to ₹6,000. These savings play a crucial role in future investments, major expenses, and achieving financial goals. Over time, these small savings can grow into a large fund.
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Why an Emergency Fund is Most Important
It’s impossible to talk about financial planning without mentioning an emergency fund. Ankur Warikoo clearly states that every individual should have an emergency fund equivalent to at least six months of expenses. For a person with an income of ₹30,000, this amount comes to around ₹1,20,000. This fund becomes the biggest support during job loss, medical emergencies, or any sudden major expenses.
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Life Insurance Provides Security to the Family
Ankur Warikoo’s rule regarding life insurance is also very clear. According to him, your life insurance coverage should be 15 times your annual income. If your annual income is ₹3,60,000, you should have a life insurance cover of approximately ₹50 lakhs. This ensures the financial security of the family in case of any unforeseen circumstances.
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Planning for Retirement is Essential Now
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Finally, there’s retirement planning, which people often overlook. According to Ankur Warikoo, your retirement corpus should be 25 times your annual income. Based on this, with an annual income of ₹3,60,000, it is necessary to build a retirement fund of approximately ₹50 lakhs. This timely planning can make the future more secure and stress-free.