Showing posts from July, 2022

Assessment of your Financial Fitness

Discipline:  What are the ways in which you spend and save? Net Income: Should grow each year by at least 7% to 9% to keep up with inflation. Maintain multiple sources of income, both active and passive. The 50-30-20 rule: Allocate 50% of your income for need-based expenses, 30% for want based, and the remaining 20% for savings. Preparedness: How prepared are you to weather financial shocks? Liquidity:  A thumb rule is to keep 6 months of expenses in liquid savings Persistence: Your ability to manage debt and pursue essential life goals Debt to income (DTI) ratio: Ideal DTI ratio should be 30% or under  Credit Score: Higher your credit score (CIBIL or equivalent), the better your chances of securing credit from Banks & NFBCs. Check the health of your wealth! You are financially fit when you: Maintain a balance between income & spends Build and keep adequate reserves Prioritize saving & investments over spending. Have the ability to recover from a financial shock Can servic