Hello Sanjeev I have lost all the financial savings capabilities. I sold my only home 10 years ago when my mom passed away. I earn 2 lakhs but still unable to save anything due to commitments. House rent, house related expenses, loans, child school and other expenses Can you please guide me here

Ans: It's commendable that despite financial obligations and family responsibilities, you're looking to pave a path towards savings and investment. Balancing present needs with future goals can indeed be a tightrope walk.

Firstly, let's look at your expenses. Allocating 80k for family expenses is a significant chunk of your income. While family comes first, there may be areas where you can optimize spending without compromising on essentials.

Given your combined income of 3.2 lacs post-tax, even a small percentage saved can make a difference over time. Start by creating a budget that outlines all your monthly expenses and identifies areas where you can cut back.

For savings and investments, consider starting small with a systematic investment plan (SIP). It allows you to invest a fixed amount regularly in mutual funds. Even a modest monthly SIP can accumulate into a substantial sum over time, thanks to the power of compounding.

Lastly, review your loans and obligations. Are there opportunities to refinance at lower interest rates or consolidate debts? This could free up some funds for savings.

Remember, financial planning is a journey, not a destination. It's okay to start small. The key is consistency and patience. With time, as your income grows and obligations reduce, you'll find it easier to save and invest more. Best of luck on your financial journey!

Ans: Hello Madeswaran! It's commendable that you're seeking to take control of your finances and work towards financial freedom. Let's assess your current situation and explore steps to get you back on track.

At 33, with a monthly income of Rs. 45,000 and monthly expenses of Rs. 35,000, it's essential to understand where the remaining Rs. 10,000 is being spent. Tracking your expenses diligently can help identify areas where you can cut back and redirect funds towards savings and debt repayment.

Given your previous financial setbacks, it's crucial to prioritize building an emergency fund to cover unexpected expenses and avoid going into further debt. Aim to set aside at least 3 to 6 months' worth of living expenses in a separate savings account as a safety net.

Addressing your existing debt of Rs. 1 lakh should be a priority. Focus on clearing this debt as soon as possible by allocating a portion of your monthly income towards repayment. Cutting back on non-essential expenses can free up additional funds for debt reduction.

Considering your goal of achieving financial freedom by the age of 50, it's important to establish a long-term financial plan. Start by setting specific, achievable goals and creating a budget to track your income and expenses.

Explore opportunities to increase your income through additional sources such as freelance work, part-time jobs, or starting a side business. Generating a secondary income can provide a financial buffer and accelerate your journey towards financial freedom.

Investing in yourself through education, acquiring new skills, or pursuing career advancement opportunities can also enhance your earning potential over the long term.

Finally, seek guidance from a Certified Financial Planner who can provide personalized advice tailored to your financial situation and goals. They can help you create a roadmap for achieving financial freedom and offer support and guidance along the way.

Remember, financial freedom is achievable with determination, discipline, and strategic planning. By taking proactive steps now, you can pave the way for a brighter financial future.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

Ans: Saving is very simple. Create a budget. Based on the budget see how you can increase your income or decrease your expenses. Both will result in savings. It is suggested that you save atleast 10% of your income.

Ans: I understand your concern about not having savings despite having a good income. It’s important to have a solid financial plan. Let's explore a comprehensive approach to help you save and grow your wealth.

Understanding Your Financial Situation
You earn Rs. 1.15 lakh per month. This is a good salary and you have the potential to save and invest. Let's first understand where your money is going. Track your expenses for a month. Categorize them into essentials and non-essentials. This will give us a clear picture.

Creating a Budget
A budget is the foundation of financial planning.

List down your monthly income and expenses.

Categorize your expenses into fixed (rent, utilities, groceries) and variable (entertainment, dining out).

Set a savings target, aiming to save at least 20% of your income.

Emergency Fund
An emergency fund is crucial.

It should cover 3-6 months of living expenses.

Start by saving a small amount each month until you reach this goal.

Keep this fund in a savings account or a liquid mutual fund for easy access.

Debt Management
If you have any high-interest debt, prioritize paying it off.

High-interest debt can erode your savings and investments.

Consider consolidating your debts or refinancing them to lower interest rates.

Automate Your Savings
Automating your savings ensures consistency.

Set up automatic transfers to your savings account or investment account as soon as your salary is credited.

This way, you won’t be tempted to spend the money.

Investment Options
Now, let’s discuss how to grow your savings.

There are various investment options available.

Given your age, you should consider a mix of equity and debt investments.

Mutual Funds
Mutual funds are a great way to invest.

They offer diversification, professional management, and the potential for good returns.

You can start with Systematic Investment Plans (SIPs) in mutual funds.

SIPs allow you to invest a fixed amount every month.

Types of Mutual Funds
There are different types of mutual funds based on risk and return.

Equity Funds: These invest in stocks and have the potential for high returns but come with higher risk. Ideal for long-term goals.

Debt Funds: These invest in bonds and other fixed-income securities. They are less risky but offer moderate returns. Suitable for short to medium-term goals.

Hybrid Funds: These invest in a mix of equity and debt. They balance risk and return. Good for medium-term goals.

Benefits of Mutual Funds
Diversification: Mutual funds invest in a variety of securities, reducing risk.

Professional Management: Funds are managed by experienced fund managers.

Convenience: Easy to invest and manage.

Liquidity: You can easily redeem your investments.

Power of Compounding: Reinvesting your returns can lead to exponential growth over time.

Risk and Compounding
Investing in mutual funds carries some risk.

However, with proper planning and diversification, these risks can be managed.

The power of compounding can significantly boost your wealth over the long term.

Disadvantages of Index Funds and Benefits of Actively Managed Funds
Index funds aim to replicate the performance of a market index.

While they have lower fees, they lack active management.

They can't outperform the market.

In contrast, actively managed funds aim to beat the market.

Skilled fund managers can make investment decisions based on market conditions.

This can potentially lead to higher returns.

Disadvantages of Direct Funds and Benefits of Regular Funds
Direct mutual funds have lower expense ratios.

But they require you to manage your investments.

This can be time-consuming and requires knowledge of the market.

Regular mutual funds, managed through a Certified Financial Planner, offer professional advice.

They help you make informed investment decisions.

This can lead to better returns despite higher expense ratios.

Tax Planning
Effective tax planning can save you a lot of money.

Invest in tax-saving instruments like ELSS (Equity Linked Savings Scheme) mutual funds.

They offer tax benefits under Section 80C of the Income Tax Act.

Retirement Planning
Start planning for your retirement now.

The earlier you start, the better.

Consider investing in the National Pension System (NPS).

It offers good returns and tax benefits.

Insurance
Ensure you have adequate life and health insurance.

Life insurance will protect your family in case of an unfortunate event.

Health insurance will cover medical expenses.

Regular Review
Review your financial plan regularly.

Life situations and financial goals change.

Make adjustments to your plan as needed.

Setting Financial Goals
Set clear, achievable financial goals.

Short-term goals could be building an emergency fund or saving for a vacation.

Long-term goals could be buying a house or planning for retirement.

Having goals will keep you motivated.

Lifestyle Changes
Consider making some lifestyle changes to save more money.

Cut down on unnecessary expenses.

Look for ways to reduce your monthly bills.

Even small savings can add up over time.

Building Multiple Income Streams
Consider building multiple income streams.

This could be through freelancing, a side business, or investments.

Multiple income streams provide financial stability and increase your savings potential.

Educating Yourself
Take time to educate yourself about personal finance and investments.

Read books, attend workshops, or take online courses.

The more you know, the better financial decisions you can make.

Seeking Professional Help
If you find financial planning overwhelming, consider seeking help from a Certified Financial Planner.

They can provide personalized advice based on your financial situation and goals.

Final Insights
Saving and investing require discipline and planning.

Start with small steps and gradually increase your savings and investments.

Stay committed to your financial goals.

With time and patience, you can build a strong financial foundation.


It's commendable that you are taking steps towards financial stability.

Your willingness to seek advice shows your commitment to improving your financial situation.

Everyone starts somewhere, and you are on the right path.

I appreciate your trust in seeking guidance.

Your proactive approach will surely yield positive results.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in