Just as chemical equations might seem complicated to finance professionals, financial concepts can feel just as tricky for those from other fields. But no matter your background, mastering basic money management is essential in avoiding financial stress – both now and in the future.

– Understanding Your Money: The Basics

Before we dive into money management, let’s define a few simple terms:

1. Fixed Expenses – These are non-negotiable expenses you must pay, no matter what. Think of rent, EMIs, WiFi bills, groceries, electricity, and transport costs. While they may change slightly, you can’t skip them.

2.Fluctuating Expenses – These are costs you have control over. Entertainment, shopping, travel, dining out things that depend on your lifestyle and choices.

3. Savings – This is the money you set aside for the future. You can put it in a savings account, invest it, or use it later for bigger goals.

(In economic terms, fixed expenses are inelastic you HAVE to pay them, while fluctuating expenses are elastic you can adjust them.)

Now that we understand the basics of expenses and savings, let’s explore some smart money habits that will help you build a stress-free financial future.

– 8 Smart Money Habits for a Stress-Free Life

1. Track Your Expenses

Start by noting down your income and every rupee you spend in a month. Categorize them as fixed or fluctuating to see where your money is going. Once you track your spending, you’ll spot unnecessary expenses and make better financial decisions.

2. The 40/30/30 Rule

A simple way to manage your income is to divide it as follows:

• 40% for Fixed Expenses – Rent, groceries, EMIs, bills

• 30% for Fluctuating Expenses – Shopping, dining, entertainment

• 30% (or More!) for Savings & Investments – Emergency fund, investments, retirement

Example: If you earn ₹1,00,000 per month:

• ₹40,000 goes to fixed costs

• ₹30,000 for fun and flexible spending

• ₹30,000 for savings & investments

This method helps you balance spending and saving without overcomplicating things.

3. Pay Off Debts Quickly

Loans and credit card bills with high interest can eat into your savings. Pay them off as soon as possible, starting with the ones that have the highest interest rates. The faster you clear your debts, the more money you’ll have for yourself.

4. Build an Emergency Fund

Life is unpredictable. Medical emergencies, job loss, or unexpected expenses can happen anytime. That’s why you need a safety net. How much should you save?

Aim for at least 3-6 months’ worth of living expenses in an easily accessible savings account or liquid fund. Start small ₹500 or ₹1,000 a month and build it up over time.

5. Get Health Insurance

Medical bills can drain your savings fast. A good health insurance plan ensures you don’t pay out-of-pocket for major medical expenses.

When choosing a plan:

– Pick an insurer with a high claim settlement ratio.

– Avoid policies with sub-limits (cap on expenses like hospital room rent).

– Prefer plans without co-payments (where you must pay part of the bill).

Good health coverage protects both your savings and your peace of mind.

6. Save for Your Goals

Whether it’s a vacation, a new car, or a dream home, saving for personal goals keeps you motivated.

Many financial institutions offer goal-based savings plans that allow flexible contributions and early withdrawals without penalties. You can also opt for Mutual Funds with systematic investment plans that align with your financial targets.

Think of it as a “goal piggy bank” that also earns interest!

7. Plan for Retirement (Yes, Even If You’re Young!)

Retirement may seem far away, but the earlier you start, the more you’ll benefit from compounding (where your money earns returns, and those returns earn returns).

How much to invest?

A simple rule: 100 minus your age should be in high-risk investments like stocks and mutual funds, and the rest in safer options like debt funds.

For example, if you’re 25: 75% of your investments should be in stocks/mutual funds.
25% should be in safer investments like debt funds.

However, this is not a hard and fast rule, you can adjust it based on your risk profile, family responsibilities, debt, and financial goals.

8. File Your Income Tax Returns (ITR)

Regularly filing ITR helps maintain a record of your earnings and financial health. It is required for visa approvals (for assuring visa officers that you can support yourself during your stay abroad) and also helps in securing loans and credit cards. Filing returns on time ensures you’re always prepared for future financial needs.

Taking the Next Step: Making Your Money Work for You

Once you have built a solid financial foundation, the next step is growing your wealth through investments. Many people hesitate to invest, thinking it’s complex or risky, but with the right approach, it can be simple and rewarding.

– SIP (Systematic Investment Plan) – The Easy Way to Invest

Investing in stocks and mutual funds can be overwhelming, but SIP makes it simple. It’s like a piggy bank that grows over time!

How It Works:

1. Pick a Mutual Fund – Choose a fund based on your risk level.

2. Set an Amount & Date – Decide how much to invest monthly.

3. Auto-Deduction – The money is invested automatically.

4. Buy Units – When prices are low, you buy more; when prices are high, you buy less.

5. Compounding Magic – Over time, your investment grows exponentially.

Why Systematic Investment Plan (SIP) ?

• Affordable – Start with as little as ₹ 500.

• No Timing Worries – Since you invest regularly, you don’t need to worry about market ups and downs.

• Power of Compounding – The longer you stay invested, the more your money grows.

• Disciplined Saving – Helps you develop a habit of saving and investing regularly.

In short, SIP is like planting a seed—you water it regularly (invest money), and over time, it grows into a big, strong tree (wealth).

– Final Thoughts: Take Charge of Your Finances

Managing money doesn’t have to be confusing. By tracking your spending, saving smartly, and investing wisely, you can secure your financial future without stress.

The key is consistency. Small, regular steps will lead to long-term financial success. Start today, and watch your money work for you!

To understand more on the topic as well as to start investments please feel free to contact us:

Phone: +91-9324609115

E-mail: team@richvikwealth.in

The article is authored by Ms. Shanvi Sanil from Team RichVik.