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Ramalingam Kalirajan |8019 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Jun 27, 2024

Ramalingam Kalirajan has over 23 years of experience in mutual funds and financial planning.
He has an MBA in finance from the University of Madras and is a certified financial planner.
He is the director and chief financial planner at Holistic Investment, a Chennai-based firm that offers financial planning and wealth management advice.... more

Question by Nithin on Jun 27, 2024Hindi

Hello sir, I have recently joined government job and earning Rs.29,555 per month and I'm 27 years old. I have to send 20k for my family as our monthly expenses and have younger sister who is still studying and even her expense are covered in that 20k. In the remaining 9k I have to spend Rs.2500 for monthly bus pass and 1k for petrol and 1.5k for miscellaneous. I don't have any savings o, how can I save money for my future from this?

Ans: Congratulations on your new government job! You’re already on a great path by thinking about saving and planning for your future. Let’s break down your situation and find ways to manage your finances effectively while saving for the future.

Understanding Your Financial Situation
You earn Rs. 29,555 per month. You send Rs. 20,000 to your family for expenses, which includes your younger sister’s educational expenses. After this, you have Rs. 9,555 left.

Your monthly expenses are:

Rs. 2,500 for a bus pass

Rs. 1,000 for petrol

Rs. 1,500 for miscellaneous expenses

This leaves you with Rs. 4,555 at the end of each month.

Creating a Budget
Creating a budget is essential. It will help you track your spending and ensure you save money every month. Let’s create a simple budget plan.

Fixed Expenses
Family expenses: Rs. 20,000

Bus pass: Rs. 2,500

Petrol: Rs. 1,000

Miscellaneous: Rs. 1,500

Total fixed expenses: Rs. 25,000

Savings
Emergency fund: Rs. 1,000

Long-term savings: Rs. 1,555

This way, you can start building a financial cushion while also setting aside money for the future.

Building an Emergency Fund
Having an emergency fund is crucial. It helps you handle unexpected expenses without derailing your financial plans. Aim to save at least Rs. 1,000 each month. Even though it might seem small, it will grow over time. Keep this money in a savings account for easy access.

Long-term Savings and Investments
With Rs. 1,555 left for long-term savings, consider investing in mutual funds. They offer better returns compared to traditional savings accounts. Start with a systematic investment plan (SIP) in mutual funds. It allows you to invest a fixed amount regularly, which can be as low as Rs. 500 per month.

Benefits of Mutual Funds
Mutual funds are managed by professionals who invest in a diversified portfolio. This reduces risk and can provide higher returns over time. By investing through a certified financial planner, you get expert advice and personalized investment plans.

Financial Goals
Short-term Goals
Emergency Fund: Save at least Rs. 20,000 in the next year for emergencies.

Savings for Small Purchases: Set aside a small amount each month for things you want to buy in the near future.

Long-term Goals
Retirement Savings: Start a retirement savings plan. Even small amounts invested regularly can grow significantly over time.

Sister’s Education: Continue supporting your sister’s education. Once she graduates, you can redirect this money to other financial goals.

Tips for Saving Money
Track Your Expenses: Use a budgeting app or a simple notebook to track your daily expenses. This helps identify unnecessary spending.

Cut Unnecessary Costs: Review your expenses and cut down on non-essential items. Small savings add up over time.

Use Public Transport: You’re already doing this with your bus pass. It’s a great way to save money.

Cook at Home: Avoid eating out frequently. Cooking at home is cheaper and healthier.

Look for Discounts: Always look for discounts and deals when shopping. This can save you a lot over time.

Importance of Financial Discipline
Being disciplined with your finances is key to building a secure future. Stick to your budget, save regularly, and avoid unnecessary debt. Over time, these habits will pay off.

Seeking Professional Advice
Consider consulting a certified financial planner. They can provide personalized advice and help you create a comprehensive financial plan. They can also help you choose the right mutual funds and other investment options based on your risk tolerance and financial goals.

Final Insights
Your current financial situation might seem tight, but with careful planning and disciplined saving, you can achieve your financial goals. Start by creating a budget, building an emergency fund, and investing in mutual funds through a certified financial planner. Over time, your savings will grow, and you’ll be better prepared for the future.

Remember, every small step you take towards saving and investing counts. It’s important to stay consistent and patient. Your efforts today will secure a brighter financial future for you and your family.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in

DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.