Budgeting & Emergency Savings

 

The 50/30/20 Rule

• Essentials (50%): Rent/mortgage, utilities, groceries, insurance.

• Wants (30%): Dining out, subscriptions, hobbies.

• Savings & Debt Repayment (20%): Emergency fund contributions, retirement, extra loan payments.

Building an Emergency Fund

• Why It Matters: Unexpected expenses—medical bills, car repairs, job loss—can derail your progress without a cash cushion.

• How Much to Save: Aim for 3–6 months of essential living expenses, held in a high‑yield savings account for easy access.

• Automation & Momentum: Set up automatic transfers each payday; even ₹2,000 per month compounds quickly and builds discipline.

Zero‑Based & Envelope Budgeting

• Zero‑Based Budget: Assign every rupee of income a purpose—spending, saving, or investing—so that Income − Outlays = 0. This prevents “leftover” money from slipping away.

• Digital Envelope Apps: Tools like Walnut or Goodbudget let you create virtual “envelopes” for categories (fuel, groceries) and track balances in real time.