Investment Tips: The year 2026 is just a few days away, and like every new year, people are resolving to improve their financial habits. Amidst rising inflation, increasing rents, and constant EMIs, the biggest challenge is how to save money at the end of the month. Addressing this problem, finance influencer Ankur Warikoo has shared a simple financial rule that even an average salaried person can easily adopt.
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The Formula for Balancing Income and Expenses
Ankur Warikoo believes that financial stress increases when there is a mismatch between expenses and income. If you decide in advance how much money will be allocated for rent, EMIs, savings, and investments, you can avoid unnecessary stress. He has explained this rule with a simple example so that everyone can apply it according to their salary.
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How Much Should Your Rent Be?
If a person’s monthly salary is 30,000 rupees, then according to this rule, their annual rent should not exceed two months’ salary. That is, the rent for the entire year should not exceed 60,000 rupees. This means that the monthly rent should be around 5,000 rupees. This prevents a large portion of your income from being spent solely on rent, leaving money for other needs.
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What Does the Rule Say About EMIs?
Regarding EMIs, Ankur Warikoo clearly states that they should not exceed 30 percent of your monthly income. On a salary of 30,000 rupees, this amount should be limited to 9,000 rupees. This helps keep the loan burden under control and prevents problems in the event of any unexpected expenses.
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Why are Savings and an Emergency Fund Important?
The next important part of this financial plan is savings. According to the rule, every person should save at least 20 percent of their income. In this example, this amounts to 6,000 rupees every month. Special emphasis has also been placed on an emergency fund. Every individual should have an emergency fund equivalent to at least six months’ worth of expenses. Based on a salary of Rs. 30,000, this amounts to approximately Rs. 1.20 lakh, which provides significant relief in case of a medical emergency or job loss.
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Life Insurance for Family Security
According to Ankur Warikoo, life insurance is not just an expense but a safety net. His rule of thumb is that your life insurance coverage should be 15 times your annual income. If your annual income is Rs. 3.60 lakh, your insurance cover should be around Rs. 50 lakh to secure your family’s future.
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Don’t Neglect Retirement Planning
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Finally, there’s retirement planning. People often postpone this, considering it a distant need, but according to Ankur Warikoo, your retirement corpus should be at least 25 times your annual income. In this example, it’s essential to build a retirement fund of approximately Rs. 50 lakh. Starting early makes this goal easily achievable.