3.84LPA Salary, No Savings: How Do I Start Saving for the Future?

Ans: Congratulations on your recent marriage and building a house. These are significant milestones. However, you are now at a stage where savings for the future are essential. With an annual salary of Rs 3.84 lakh, it's possible to create a solid financial plan.

First, we need to understand that your priority now should be to build an emergency fund. You may have spent all your savings, but starting now will help secure your financial future.

Let's walk through the steps to restart your financial journey.

Start Building an Emergency Fund
This is the foundation of any financial plan. Aim to save at least 3-6 months of your monthly expenses.

Start small, maybe Rs 1,000 or Rs 2,000 per month.

Open a separate savings account dedicated only to this emergency fund.

As your salary increases, you can gradually increase the savings.

This fund will be your safety net in case of unexpected expenses like medical emergencies, job loss, etc.

Planning for Short-Term Financial Goals
In the next 3 to 5 years, you might have specific goals. These can include vacations, upgrading your home, or even planning for a child's education.

Identify your goals and the amount you will need for each one.

Allocate small amounts to savings or mutual funds for these short-term goals.

Avoid spending all your income on lifestyle expenses. Your goal is to set aside at least 20% of your salary every month.

Streamline Your Monthly Expenses
With your current salary, living within your means is essential. Focus on controlling your expenses.

Track your spending to identify unnecessary expenditures.

Reduce discretionary spending like dining out, entertainment, etc.

You should aim to save around Rs 5,000 each month. This will help you build a healthy savings habit.

Prioritize Debt Repayment
If you have any loans or credit card debt, it's time to address them. You don’t mention having loans, but if you do, prioritize repaying high-interest debts first.

Allocate a part of your savings to debt repayment.

Pay more than the minimum required amount, if possible.

This will reduce your financial burden and allow you to focus more on saving for future goals.

Importance of EPF and PPF
Even though you are starting your financial journey, investing in safe and secure options like EPF and PPF can provide long-term benefits.

If your company offers EPF, make sure to contribute to it regularly.

Consider opening a PPF account and start contributing Rs 500 or Rs 1,000 monthly.

These investments provide tax benefits and can build a solid retirement corpus.

Systematic Investment Plans (SIPs)
Once your emergency fund is established, and you have some liquidity, start investing in Systematic Investment Plans (SIPs).

You can start with a small amount, even Rs 500 or Rs 1,000 per month.

Look for funds that match your long-term financial goals.

Investing in SIPs helps to build wealth over time. The power of compounding will work in your favour in the long run. Avoid direct plans; instead, go with regular funds through a Certified Financial Planner (CFP). Regular funds offer expert guidance and personalised services.

Avoid Insurance-Cum-Investment Plans
Stay away from ULIP or LIC endowment policies that combine insurance with investment. These products usually give lower returns compared to mutual funds.

Pure term insurance with high coverage is a better choice for life insurance.

Health insurance is also important for you and your family.

Avoid mixing investment and insurance. Always keep them separate for better returns and adequate coverage.

Rebuilding Savings After Marriage and House Construction
You may feel that starting from scratch is difficult, but small steps will build up. The key is consistency in your saving habit. Begin with the amount you can manage without putting too much pressure on your monthly expenses.

Set up automatic transfers from your salary account to a savings or investment account.

Gradually increase the amount you save as your income grows.

You don’t need to make huge investments right away. Start small but ensure that you are investing every month.

Retirement Planning
Although you are just beginning to save, it’s never too early to plan for retirement. You can aim to retire comfortably by building your retirement corpus over time.

Contribute regularly to your EPF and consider opening a PPF account.

Start with a modest contribution and increase it over time.

These government-backed schemes provide safe, tax-saving, and reliable returns. Building a retirement fund should be one of your long-term financial goals.

Don’t Rely on Index Funds or Real Estate
Index funds may seem attractive, but actively managed mutual funds offer better opportunities for wealth creation. With your current income, you need actively managed funds that can give better returns than index funds.

Actively managed funds are more flexible and can adapt to market conditions.

They provide better growth opportunities over time.

Also, avoid real estate as an investment option, as it requires high capital and is less liquid. At this stage, your focus should be on building more liquid assets like mutual funds, which can be easily accessed when needed.

Tax Planning
With your income, tax savings should also be considered.

Invest in tax-saving options like PPF, ELSS mutual funds, and EPF.

These not only save tax but also help in wealth creation.

Consult with a Certified Financial Planner to optimise your tax-saving strategy and improve your savings.

Final Insights
Starting to save after big life events like marriage and house building may seem difficult, but it's possible with the right plan. Begin with small, manageable amounts, and stay disciplined.

Focus on:

Building your emergency fund first.

Investing in SIPs and tax-saving schemes.

Avoid mixing insurance with investments.

Monitoring your expenses and cutting down on unnecessary spending.

With a steady savings plan and investments in mutual funds, you will be able to build a secure financial future.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment