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Financial/Budgeting/Banking Rules

There are already so many people proven and suggested the Financial Rules.

I am trying to collect them here.

Rule 1: 50-20-30

If you earning 100 rupees, one should spend as follows.

50- For necessities
20- Long term Saving
30 - Life Style Choices

Rule 2 : 30 days rule

If you want to buy anything big item like TV or fridge, post pone your decision for 30 days. If you still have a urge to buy it, go for it.

Rule 3 : CC bill should never go beyond 30% of limit.

If your credit bill is going beyond 30% of limit, you don't have control over your expenses or your needs crosses your income.

Rule 4: Dave Ramsey - Financial Rule

25% - EMI
15% - For retirement
10 years - Life Insurance
3 months - Emergency Funds

Rule 5: Car Loan Rule - 20/4/10

20 - percentage of down payment
4 - max tenure
10 - percentage of income

Rule 6: 28/36 - DTI ratio

Your housing EMI should not more than 28%
All your debts should not be more than 36%

Rule 7: Home loan eligibility

50-60 times of your salary

Rule 8: Income break up

35% - Housing 
15% - Food
12% - Transportation
8% - Debts(CC)
7% - health care(insurance)
5% - Cell phone bills
5% - Other Savings
5% - Entertainment
3% - Clothing

Rule 9: Personal Loans

Should not go beyond 12 times of your monthly salary

Rule 10: Liquidity

At least 20% of your wealth should be liquid so you can utilize it when necessary.

Rule 11 : Perfect Portfolio 

A typical allocation would be 50 per cent in large-cap funds, 20-30 per cent in small & mid-cap funds, and the rest in debt funds.

Rule 12: Contingency planning

All regular expenses of 3 to 6 Months 

Rule 13: Health insurance

Family Floater Plan and Personal Accident Cover: 

Rule 14: Life Insurance

As a thumb rule, your sum assured should be at least 10 times of your annual income: Outstanding Loans+ Dependents Expenses (Childs education, marriage) Inflation to be considered, Spouse Life expectancy 

Rule 15: Retirement Planning

Current Age Minus Retirement Age , Household and lifestyle expenses on Today’s value 





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