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When we speak about finances it is a huge ocean. Many of us are lost in the journey. They do not know where to start and where to stop. Simple! Start with me and let’s walk together.

We need to understand that finances need to be catergorised into various types. Here are a few types of finances which will help you understand better. Remember finances are catergorised on the basis of the goal we need to achieve

1. Everyday transactions

This is the most volatile and unpredictable category. One needs to have utmost control on finances when it comes to this category. Make a list of expenses that come across during the month. Keep the required amount aside from your monthly income. These expenses are usually repetitive in nature and will require to be funded every month. They can include groceries, monthly maintenance etc

With various measures and simple hacks you can reduce the amount to be dedicated to this category. Remember this category will not give you any return in the future and this is only a use of money. Here are a few ways to reduce your expenses in various areas

Home and Kitchen

Gifting ideas


Food habits

2. Emergency fund

This is the first step towards your financial planning. Try to save firstly minimum Rs 10,000, then go on to increase to make it up to 3 to 6 months of your monthly income. This is very useful in emergencies like loss of job, sudden medical expense etc.

This funds should be in the form of easily accessible or in other words highly liquid forms so that you can quickly encash them. Some of the best instruments include Fixed deposits and Liquid Mutual funds

3. Short term goal fund

Every one of us should have financial goals. Unless you dream you do not achieve. This category should have savings towards goals achievable within 5 years. Say you plan to get married, or own a car or a house; all of this fits into this category.

Decide on your goal. Estimate the fund required and make a present value calculation of the same. I will soon share a worksheet that will help you calculate this easily. The best way to do this is Mutual Fund SIP, Gold bonds.

4. Travel and recreation fund

Well, for the present day generation travel is a religion by itself. And why not.  But sadly none of them plan travel finances. It is a whole area of study by itself. I have seen folks spending all their savings on their wedding and then honeymoon that if they lose their job amidst this they have to borrow from someone else.

Plan your travel finances well. Realize that you have a long life to live and you need not  finish travelling all at once. You need to spread your travel to balance your finances. Create a travel fund for yourselves. I did that. Keep a small portion of your monthly income as travel fund and do not use it other than for travel. When I say that I also mean that do not use other funds for travel.

5. Retirement Savings

These are your long term savings. These should come in the form of real estate, shares etc  as these instruments give the best returns in the long term. Do not ignore this category because you should be dependent on someone else when your not physically fit to work. Start small and go on to increase saving in this category more. I wish you have a happy retirement with proper planning at an early stage. People who work in high paid jobs even plan early retirement when they think they have made enough in this category.

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