With a surge in demat accounts and a growing interest in equity markets, a large number of urban Indians appear to be focusing more on wealth creation than ever before. But with living costs rising steadily and incomes showing little sign of catching up, many still find it difficult to stick to their financial goals.
Even so, personal finance experts often point out that smart money management doesn’t always need a fat salary. A few simple strategies could make a noticeable difference over time.
Here are some of the basics that could come in handy—especially if your income is tight, but your goals are ambitious.
It’s not unusual to lose track of small expenses that quietly chip away at your salary. That’s putting 50% of their income towards essentials like rent and groceries, 30% on personal wants or lifestyle choices, and the remaining 20% towards savings and investments.
It’s a straightforward way to map your spending habits. Over time, you might spot areas where you can cut back, freeing up more room for savings without drastically changing your lifestyle.
Before aiming for long-term investments or financial freedom, a decent emergency fund is usually considered non-negotiable. The general advice is to stash away at least six months’ worth of expenses. This could help cover unexpected events like job loss or a health crisis—without having to touch long-term savings.
It may not sound exciting, but it’s the sort of buffer that helps you sleep better at night. As Benjamin Franklin once said, “An investment in knowledge pays the best interest.” In this case, some research and planning might just protect you from a financial spiral.
If income is limited, investments often get postponed. But financial planners tend to stress that starting early is more important than starting big.
One option could be mutual funds or SIPs (Systematic Investment Plans), especially through the direct mode which typically charges lower fees. The idea is to get the habit going first—even with as little as ₹500 a month. Over time, thanks to compounding, small regular investments may grow into a sizable amount.
Some books that could offer useful guidance include The Psychology of Money, The Intelligent Investor, and One Up on Wall Street—all considered beginner-friendly by many in the investing world.
Another frequently mentioned tip is diversification. That means not putting all your money into one type of investment. Instead, you could explore a mix of equities, bonds, gold, or even real estate depending on your comfort level and financial goals.
If one market dips, others might balance it out. Keeping an eye on your portfolio and tweaking it every few months could help you stay on track. And if you’re unsure about what to do next, it might be worth speaking to a certified financial planner rather than relying on guesswork.
A little financial literacy can go a long way. Thanks to free resources—YouTube channels, blogs, podcasts, and even Reddit or Quora threads—it’s never been easier to pick up basic money skills.
Understanding how markets work, how mutual funds differ from direct equity, or how interest rates impact loans could help you make informed decisions instead of random ones. Think of money management as a soft skill—it’s something that might not be taught in schools but is essential in day-to-day life.
Financial stability might not come overnight. But with some patience, discipline, and a willingness to learn, it might just be within reach—even for those on modest salaries. As one saying goes, “It’s not about how much money you make, but how much money you keep.”
With the right approach, it seems possible that even limited income can be stretched towards bigger dreams.
(By arrangement with livemint.com)
