With the stock markets here in India picking up well post the March end slump, still small time investors like me, are not very confident on its rise, as pretty soon we would witness a deep dive again.

For a regular income person, there is a simple rule. In the Indian context, we still have good 7+ percent returns on govt saving options like PPF. This PPF type savings of an individual should strictly be kept for your retirement. A solid 25 years of maxing your PPF amount of 1.5 lakhs per year would make you set for a comfortable retirement. As you would know the amount you make in the end is entirely non taxable. You have a non taxable, confirmed sum when you are ready to encash the same, ideally after 25 years.

So my rule is – no matter what divide your extra money into 2 groups- 1.retirement savings and 2.short term, future pending savings. Well a fixed amount about 10-15% of your income for the retirement account and a healthy 30% for short term upcoming event savings. Upcoming event would be education, marriage, family holiday, a side hustle, etc. If incase you do not use your upcoming event savings, no problem convert the same into FD, as you will probably use it the next year. Do not put it into the stock markets, not even mutual funds. For these short terms I prefer only FDs or RDs.

A final addition to the Rule is Emergency account. An account which will see you through for the next 6 months at least. In post 2000 era, it would be great to have this increased to 12 months. This emergency should not only pay for your monthly expenses like rent, food, clothes, etc but also your retirement account contribution. Hence take some time to build this fund. Ideally should take you about 3 years to have this achieved. This will surely make your life a hell lot easy on you. Keep working on it, see you next week!

Starting is really tough, when you finally realise you have started late on the saving and investing game, hence are worth currently less than what you would have liked and what would have made you comfortable financially.

The first step is to know where you stand! Just list down, how much you earn, what you spend, how much you have saved, your liabilities- your emis, credit cards, etc and finally your investments like PPF, mutual funds, stocks, etc. This should give you a clear picture of what is your financial worth.

Now can you just figure out, are there ways where you can increase your income? Asking for a hike, job switch, an additional side gig? A simple tax saving investment could also give your income level a boost.

Note, the strict, regular savings and investment path which you have started will start making sense and make you feel worth doing it at least after 6-12 months. The first months will not make you feel good trust me, it’s only post a year or two, when you will be glad that you did it.

Lastly, be careful and list down your online purchases, we unknowingly make a good amount of purchases and reduce our saving capacity. Because it’s so easy to buy with just a few clicks we actually do buy many things which we do not need and eventually do not use – paid waste! Get down and put it in a piece of paper or and excel sheet- your income, investments, spending numbers, time to get deep in it to visualise where you stand.

Well well well, strange times now, where financial well being of individuals have always been slippery for the unplanned or the 90% of the workforce, times like these have made it even more tough to strive for financial independence (FI).

But it’s true, it makes individuals look into FI with more seriousness and an even more desire. Every business has its ups and downs and if you are an employee or the employer, risks of cyclical slow downs and a surprise virus attack is something which we should be prepared and let’s start with the preparations right now, shall we?

Look, I am not a finance guru or a philosophy student nor am I an MBA in finance. I am just a normal corporate guy with decent amount of experience in making personal finance mistakes and aggressively working for a FI future in the next 8 years. I will be breaking down by steps to achieving the same in the post’s to come, a weekly which I will be uploading every Sunday evening.

Things which I have consciously tried, tested, and out of the many options the ones which worked well for me, I will share them with you all. Mostly, all my steps would be in the Indian context, financial instruments curently best in India. But general rules should be universal. Further to my little not so clear introduction to myself in the paragraph above, I work in an MNC and was a totally mismanaged earner till about 2 years back. I have pulled back my gear, sat down, understood the importance and the luxuries of a financially independent life and a potential FIRE(financial independence retire early) and my desire to reach that in the next 8 years, phew..for my last lines for this week – think and work towards a high double digit pay raise in the current organization or switch to a new one!

Thanks for joining me!

Good company in a journey makes the way seem shorter. — Izaak Walton