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How can I save for my dream home on a 35,000 salary?

Ramalingam Kalirajan |8111 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Mar 10, 2025

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 Suchithra on Mar 07, 2025Hindi

Hello...I am planning to construct a home in next 5 years. My monthly salary is only 35000. I dont have any idea how to make my dream into a success. Please give me an idea how I can save my money to make a home with a budget of 30 lakhs.

Ans: Building a home is a big financial goal. You want to construct a house worth Rs 30 lakh in 5 years. Your monthly salary is Rs 35,000. With the right savings and investment plan, you can make this dream a reality.

Step 1: Understanding the Total Budget Requirement
The house construction cost is Rs 30 lakh.

You will need to save or arrange this amount in 5 years.

Costs may increase due to inflation.

Having a buffer amount is important for unexpected expenses.

Step 2: Evaluating Your Savings Capacity
Your monthly income is Rs 35,000. The goal is to save a portion consistently.

First, identify your essential monthly expenses.

Reduce unnecessary spending to increase savings.

The more you save, the less you need to borrow.

Step 3: Creating a Dedicated Home Fund
Open a separate investment account for home savings.

Invest in growth-oriented mutual funds.

Avoid keeping all money in fixed deposits due to lower returns.

Step 4: Choosing the Right Investment Strategy
A 5-year investment plan should have a balance of growth and safety.

1. Avoid Index Funds and ETFs
Index funds cannot adjust to market risks.

Actively managed funds perform better in volatile markets.

2. Avoid Direct Mutual Funds
Direct funds need market tracking and knowledge.

Investing through a Certified Financial Planner (CFP) ensures proper management.

3. Maintain Liquidity for Construction Costs
Keep some funds in liquid investments for easy access.

Avoid locking money in long-term illiquid assets.

Step 5: Considering a Home Loan as an Option
If saving Rs 30 lakh is difficult, a home loan can help.

Banks may provide up to 80% of the home cost.

Your EMI should not exceed 40% of your income.

Higher down payment reduces loan burden.

A shorter loan tenure saves interest costs.

Step 6: Cutting Expenses to Boost Savings
Reduce unnecessary spending like eating out and entertainment.

Avoid impulse purchases.

Use discounts and cashback options to save more.

A simple lifestyle today helps in building your dream home sooner.

Step 7: Reviewing Your Plan Every Year
Track savings and investments regularly.

Adjust plans if income increases or expenses change.

Consult a Certified Financial Planner (CFP) for guidance.

Finally
A Rs 30 lakh home in 5 years is possible with proper planning. Focus on consistent savings, smart investments, and controlled spending. If needed, a home loan can bridge the gap. With discipline and patience, your dream home can become a reality.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

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.