Your Chartered Friend-Part 1 : What exactly to do with your monthly salary?

I came across many incidents where my friends in job from non-commerce background struggle to understand the financial world and terms. So much so that it become a hindrance in taking good and important decision and increases their dependability. 

Fair enough given existing educational system. But never mind, your Chartered friend is at your help.

With this first part of the series, we are going to discuss one topic in one blog. Frequency I will try to keep weekly but won't assure. You know about sundays 😂.

So here we kickoff with first topic: What exactly to do with your monthly salary?

Assuming you have consistent / near consistent monthly income. Now you have three things to consider:

1. Your monthly necessary expenditure (Needs): We are born to pay the bills (and to eat too). Find out how much average amount of money you need for your monthly basic necessary expenditure. I repeat basic necessary expenditure. Ignore Movies, outing and party for a while. Don't forget to include the monthly average of annual charges like pest control / bonus to your maid/ taxes like property tax etc.
This amount is the amount you have to keep in your saving bank account (if credit card is there, even then approximately 75% of the amount, because you are gonna need it next month).

2. Investment (Future Needs): Define your future major needs first. Like expenditure for marriage (no your family won't agree for court marriage+world tour), expenditure for pilgrimage or any other purpose. Your may need money say after 2 years or after 7 years or 20 years or retirement so accordingly choose the investment type where you can liquidate (bring amount in saving account) the invested amount when needed. You can put 60-70% of remaining amount (after point no 1's necessary expenses) in Investments. Important is to keep 5-10% of this investable amount in most liquidate fund (e.g. Flexible Recurring RD) so that it comes handy in emergency.
Investment should mean monthly installment of your SIP, ELSS/ULIP etc. This part of percentage also covers your health insurance and term insurance premium which you have to pay annually. You may (or may not, up-to you) put average monthly amount in flexible bank recurring deposit. (Don't worry, will explain many more such terms/topics in upcoming blogs).

3. Party time (Wants): Now this balance amount that you arrive at is your blanket. And you already have legs eager to roam (Movie, solo/group trips, drinks, party etc). You know what I am going to say. If legs are going out of blanket then either get bigger/another source of blanket or fold your legs.

Btw It's not necessary that you have to spend all remaining amount in party. You can keep a piggy bank at home and inspire your family/future kids to save for bigger party/purpose.

So This is basic Idea of using the salary amount. Some have the rule of 50:30:20 in abovesaid order. You can modify at your discretion but should analyse periodically and  follow the decision.

Any doubt/suggestion/query? Let me know in comments or reach me at raghav.kalyani@hotmail.com.

Next topic would be on types of Insurances and which one and why you must have them. Hit subscribe button or keep checking this source.

Mazboori vala Disclaimer: This is not your personal financial advice. It is just for your knowledge and food for thought and action. Plz consult your financial advisor before taking any decision on the basis of this blog.

Your chartered friend is always at maximum possible help.