Financial Planning: Thumb Rules



1.  30 % of your income must be used for monthly living expenses.

2.  30% of your income must be used for Liabilities repayments, if any..

3.  30% of your income must be SAVED and INVESTED.

4.  10% of your income must be spared for Leisure, entertainment, vacations…

5.  6 months expenses must be available for emergency fund (should be invested in LIQUID FUND, FD Etc)

6.  Home loan should be registered and applied  on both husband and wife name. (Both can get benefits on Home loan Tax benefits)

7.  Buying a second house for investment is not advisable ( Survey reports – it will fetch you only around 3% return)

8.  After 45 years of age, do not take up any BIG FINANCIAL LIABILITIES (Higher education of children and wedding of children will happen around 45 to 50 only, so plan now for the same.)

9.  Have a joint account @ Bank: Savings account.

10.  Property must be registered on both Husband and wife name. (As per legal act – after husband first legal heir is wife, after wife it will go to children only)

11.  Regular check on Nominations for all financial instruments. If nominations aren’t done, do it now..

12. Only in insurance policy, Claims payable to Nominee. In other financial instruments legal heirs certificate is must to get back the settlement

13. Must have Term Insurance to financially secure future of your dependants.. Conventional Insurance products can serve as Debt oriented investments and provide assured returns in the present falling interest regime with Tax benefits.

14. Don’t take any financial investment decisions EMOTIONALLY, and also Avoid last minute tax saving investment decisions, plan well in advance..

15. Health Insurance is a must (in spite of Group mediclaim coverage given at office) (After retirement there is no mediclaim coverage, after 50-55 years of age, it’s very tough and costs a bomb to enter into mediclaim)

16. For your Jewellery / Safe Deposit LOCKER, Only Rs. One lakh is payable by bank, in case of theft or fire. Provided insurance has been done.

17. Government guarantees only Rs. One lakh for your FD as well. (Fixed deposits with Banks upto Rs. 1 lakh only are backed by deposit insurance)

18.  Must know all Tax implications. You cannot avoid paying tax. But you can minimize by way of tax planning and investments..

19.  All financial documents must be kept safely and keep family members informed of the same.

20. If you are not an expert, please take the services of a SEBI Registered Investment Adviser. Avoid mis-buying products that you don’t need.

21.  Review your portfolio at every six months..




Please enter your comment!
Please enter your name here