9 Money Checklists for your Financial Stability in 5 Years!

1. “2X rule” to know if you can afford that car. 🚗

Your annual salary should be ‘2X’ (or more) of the car you’re buying.

2. “Rule of 72”: Divide ‘72’ by the interest rate to find how many years you need to double your money.

Eg- If you get 12% returns, you need (72/12) = 6 years to turn your 50k into 1Lakh. 😎

3. Buy a house or Rent? 🏠

Check the “Price-to-rent ratio” (the price of the property/ annual rent)

~ If it’s more than 21, Rent.

~ If less, buy.

(However, if it’s an emotional decision for you check the 4th point.) 👇

4. "3/20/30/40 rule to “Buy a home”:

~ The cost of the house should be around ‘3X’ of your annual salary.

~ Take a loan for not more than ‘20 years’.

~ The monthly EMI < ‘30%’ of your salary. And

~ ldeally ‘40%’ Down payment. 💰

5. Inflation “rule of 70.”

Divide ‘70’ by the rate of inflation, that’s how many years it will take to half your money.

Eg- Current inflation in India is 6%. So it would take (70/6)= 11.67 years for your 1Lakh to feel like 50k. 🥲

6. Can you “really afford that car”? Rule of 20/4/10

~ Down Payment ‘20%’ of the car’s price.

~ Take a loan for no more than 4 years.

~ Monthly Car expenses < 10% of your monthly salary. (EMIs + Insurance) 🚙

7. Save an Emergency Fund of at least “3X to 6X” of your monthly expenses to feel Financially stable all the time.

The bigger the fund, the better it is. Go for 12X. 🌻

8. Portfolio allocation “Rule of 110.” 📊

~ Put (100- your age)% in Equity and

~ (Your age-10)% in Debt. (ideally)

9. The size of your “Term Insurance Cover” should be 8 to 10X of your annual salary plus any outstanding debt. 👨‍👩‍👧‍👦

Note: The checklists are designed to help you plan better. Feel free to modify as per your requirement. 😎

Lastly, feel free to ask me any questions you have in below comments section. 👇