Today I’m going to tell you very simple and Clever Personal Finance Rules that will help you with wealth creations as well as boost your mathematics everyday whether you are good in math or not.
Image by Nattanan Kanchanaprat from Pixabay
Here is the 5 Clever Personal Finance Rules
Rule No 1: Rule of 72
We face a problem in our daily lives whenever we are going to invest in any scheme, fixed income scheme, FD, money back plan, we stuck in that how much I got and how much time it takes to double my money etc. You can calculate it in just 10 seconds by using this rule.
For example : if you are investing in FD which give you 7% interest. You have to just divide 72 with your interest rate means 72÷7% that means you money will be doubled around 10. 3 years. With this rule we can be reach at our target amount in just 10 to 15 seconds.
Rule No 2 : 100-age rule
We face a very common question in our mind that how much and where we invest? This rule will help us in this case.
For example : if you are 30 year old then minus 30 from 100 the answer will come 70. It means that you have to invest your 70% in Equity and 30% in other asset class. It’s a thumb rule. It is on assumption that you have not taken loans. This rule give the general idea that how much where you have to invest.
Rule No 3 : 50/30/20 Rule
This rule teach us that your total take home income should be divided in 3 parts. For example your income is 50,000 then use your 50% in your monthly expenses and form remaining 50% further divide it into two percentage 30%/20%. With 30% of your income you can fulfill your wishes like you want to do party or buy something any thing. Remaining 20% you can invest it in your suitable scheme, FD or in anything. This will help you to manage your salary in a pretty manner.
Rule No 4 : 6x Emergency Rule
This rule tells us your that 6 times of your total salary amount should be saved in your saving accounts. It helps you in liquid cash anytime you can use it in emergency. You should also turn on the Auto-Sweep option by concerning to your Banker it will double your return even on saving accounts. For example your monthly expenses are 25000 then you should save at least 1.5 Lac in your saving accounts.
Rule No 5 : 20x Insurance Rule
Many people questions that How much we take life insurance plan. This rule give you the answer. If your annual income is 5 Lac then you have to take the life insurance of 20% of that annual income it means you have to take 1 crore. You should take term plan in life insurance No other plan only just Term Plan.
Posted Using LeoFinance Alpha
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