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Managing money effectively is as important as earning it. These rules simplify financial planning and ensure long-term stability.
1️⃣ Rule of 72 – Money Doubling Time
Purpose: Estimate how long it takes for an investment to double.
Formula: 72 ÷ Annual Return %
Example: 12% return → Money doubles in 6 years
2️⃣ Rule of 70 – Inflation Impact
Purpose: Understand how inflation erodes purchasing power
Formula: 70 ÷ Inflation Rate %
Example: 7% inflation → Money value halves in ~10 years
3️⃣ 4% Withdrawal Rule – Retirement Planning
Purpose: Withdraw safely from retirement funds without exhausting them
Example: Rs 1 crore fund → Withdraw Rs 4 lakh/year
4️⃣ 100 Minus Age Rule – Asset Allocation
Purpose: Balance equity vs. debt in your portfolio
Formula: 100 – Age = % in equity
Example: Age 30 → 70% equity, 30% debt
5️⃣ 10-5-3 Rule – Return Expectations
Purpose: Set realistic investment returns
Benchmarks: Equity ~10%, Debt ~5%, Savings ~3%
6️⃣ 50-35-15 Rule – Budgeting
Purpose: Control expenses and secure savings
Allocation: 50% needs, 35% wants, 15% savings/investments
7️⃣ 6X Emergency Fund Rule – Safety Net
Purpose: Handle unexpected expenses without stress
Target: 6 months of living expenses
Example: Rs 50,000/month → Rs 3 lakh emergency fund
8️⃣ 41% EMI Rule – Manage Debt
Purpose: Avoid overburdening monthly income with EMIs
Limit: EMIs ≤ 41% of monthly income
Example: Rs 1 lakh income → EMIs ≤ Rs 41,000
9️⃣ Debt-to-Income Rule – Healthy Borrowing
Purpose: Keep overall loan repayments manageable
Limit: ≤ 30% of monthly income
Example: Rs 1 lakh income → Loans ≤ Rs 30,000/month
🔟 4% Safe Rule of Compounding – Optional Reinforcement
Purpose: Reinforces disciplined compounding and withdrawals
Benefit: Steady wealth growth while ensuring financial security
✅ Key Takeaways
Plan and budget systematically using clear rules.
Protect against inflation and emergencies.
Maintain manageable debt and realistic investment expectations.
Apply these rules consistently for long-term financial freedom.
Disclaimer:
The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of any agency, organization, employer, or company. All information provided is for general informational purposes only. While every effort has been made to ensure accuracy, we make no representations or warranties of any kind, express or implied, about the completeness, reliability, or suitability of the information contained herein. Readers are advised to verify facts and seek professional advice where necessary. Any reliance placed on such information is strictly at the reader’s own risk.
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