Spending Thumb Rules for Financial Freedom

One should opt a habit of dividing Income as per below four parts to become financially free

 1) Save for future – 25%                           2) Household expenses – 25%
 3) Lifestyle expenses – 25%                    4) EMI/ Rent – 25%

 1.Save for future – 5% Health and Life insurance premium and 20% investments for short term, medium term and Long term responsibilities and dreams of life.

2. Household Expenses like food and helpers shouldn’t be more than 25% income.

3. Lifestyle expenses like movie, shopping, outside food, traveling shouldn’t be more than 25% if your income.

4.  Rent /EMI of all loans shouldn’t be more than 25% of the income.

 Few other Thumb Rules  –
Our Home cost shouldn’t be more than 5 to 6 times of our family income.
And car cost shouldn’t be 80% of our annual Family income.
Reason is Home and car both require maintenance and generally costs annually 5% to 10% of the value.

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