PrancingQuokka

Stealth

1 year in first job, please help me assess and improve

I've completed 1 year in my first job. I've tried saving and investing some money, help me decide what I can do better:

Income: 22LPA

PPF: 3 Lakh EPF: 2 Lakh MF: 5 Lakh Saving Account: 4.5 Lakh

Income for new FY post increment: 29LPA

I did these savings based on some advice from my elder brother.

I'd like to spend more this year though, with some travel and going out more, maybe even purchase a scooty/bike and a PS5 😁 - would these expenses be justified?

Apart from improving my savings & investments and still being able to afford a few luxuries, I want to know if I should get any of these:

Health Insurance - Only 5 Lakh cover from company for me and my parents (note - parents are getting old)
Life Insurance - Do we really need it, I'm still 24?

7mo ago

5.6Kviews

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PerkyMochi

Murugappa Group7mo

All expenses are justified if you are disciplined with your savings and investing. Don’t miss out on present just to save for future. You’ll miss the best years of your life. Invest and spend are the two things you should do. They go side by side. What I do is for all my luxury purchases is I take EMIs and a counter amount gets added to my SIPs as well. When I bought my car, my EMI was 40k, I increased my SIP by 25k (so my decision of car was based on whether I can spend 65k more or not rather than 40k)
Insurances are critical- you block your premium at a young age for life insurance, so do it as early as possible and as big a number as possible, take all riders like critical illness, etc. Health insurance premiums increase as you age, and is dependent on who’s the oldest being insured. You can have 2 insurances- one for parents, one for self but that doesn’t matter only more money out of your pocket. Do not take any riders along with health insurance.

PerkyMochi

Murugappa Group7mo

And bloody stop investing in PPF

PrancingQuokka

Stealth7mo

Thanks, increasing the SIP amounts when starting an EMI seems smart.

FluffyNugget

Plivo7mo

The expenses are totally justified. From how much u were able to save, I don’t see any issue. Get term and health insurance. It’s cheaper the younger you are. Ur health insurance should be separate from ur parent’s as premium takes into account the eldest in a policy something like that. So have ur own health insurance other than company’s and take out health insurance for ur parents as well if they don’t have. Assuming ur brother is earning well too, enjoy ur life and spend on family.

PerkyLlama

Swiggy6mo

Why is health insurance required even if we have company insurance? I've read this a lot, but never fully understood it.

SquishyBurrito

Stealth6mo

to adjust the risk, for instance i got fired a month ago without any notice and my insurance was also scrapped. In such a scenario my personal health insurance can come handy

FuzzyDonut

Flipkart6mo

31% increment kon si company hai bhai?

JazzyBurrito

Oracle6mo

Wo bhi 1st year as fresher

WigglyWalrus

Stealth6mo

One year into earning and I'm really glad you have this question. I wanted to share a simple approach that helped me manage my money effectively while still enjoying life. Here’s a breakdown of how you can spend your salary:

The 3-Category Rule:

Needs (30-50%): These are your essential expenses – the things you can't live without. Aim to keep this between 30-50% of your income.
- Examples: Rent, groceries, utilities, loans transportation, insurance, and medical expenses.
- Why: Prioritizing your needs ensures that you have a stable foundation. It covers your basic necessities and helps avoid any financial stress related to essential living costs.
Wants (20-30%): These are the things that make life enjoyable and fun. Aim to allocate 20-30% of your income to wants.
- Examples: Eating out, entertainment, travel, shopping, and hobbies.
- Why: Life is meant to be enjoyed! Spending on wants allows you to reward yourself and enjoy your hard-earned money without feeling guilty. It’s all about balance.
Investments (20-30%): This is for your future. Aim to put 20-30% of your income into savings and investments.
- Examples: Mutual funds, stocks, emergency funds, travel funds, education funds and retirement savings.
- Why: Investing in your future is crucial.

It helps you build wealth, achieve financial independence, and ensures that you’re prepared for any unexpected expenses or opportunities.

I hope this is helpful. It helped many of my friends and colleagues.

QuirkyQuokka

Stealth6mo

Asli id se aao ankur warikoo

CosmicHamster

Swiggy6mo

Bhai boh bada tha , but thanks, main copy kake save kiya to read when i need it

WobblyDonut

Walmart6mo

@PapaPapaya I have been working many years now. I saved and invested good chunk of my earnings in the initial stage of my career
Few words of advice for you: Investing is important so does spending on things you love. Now a days all the financial influencer’s are busy selling saving and investment ideas and showcasing how does small amounts saved today turns into crores. Look at their lifestyle. They sell these products to you for their own income and lifestyle and buy expensive homes, holiday and cars. While investing is required but you need to equally understand you have your age by your side and the energy and the enthusiasm that comes along with it. If you sacrifice your needs today on yourself and your loved ones, all you end up at later point is junk load of money. All though for some of you this might be more enticing but after all those years your mentality would already be affected. You won’t spend the money and eventually the money you accumulated will only used as a bragging point among your friends and relatives and eventually land into your kids hands, who then live a comfortable life all thanks to you 🙏 For all those who give an example of Mr. Buffet, who made fortune saving and investing since early years, look at what he did even after he has billions. It’s not worth it.

All I would tell you,

spend on things that makes you happy, that may be bikes, shopping, travel, family and what not. (This is what matters)
In the meanwhile continue your investing journey, learn to manage risks. At your age you can have good portion of investment on equity, for safety and diversification I prefer Gold and FD.
Stop PPF
Once you accumulate good portion of money, move some of the funds to real estate.
Real estate requires large amounts so take your time. Avoid personal loans
Avoid life insurance. You only need good health insurance for you and dependents. After this you can buy a term insurance.

PerkyDumpling

Angel One6mo

whats diff between life and term life insurance

WobblyDonut

Walmart6mo

In case of life insurance the premiums are very high compared to term insurance for the insured amount. This is because after the insurance tenure you will get fixed chunk of money which is decided at the policy taking time. Returns on this instrument is around 5-6 % if the person successfully completes the tenure. If the policy holder dies than the dependent will receive entire sum. But as the premiums are high one doesn’t take enough amt that required by the dependents incase of of demise. Whether you survive or not, this product doesn’t give you enough benefits either way.

Term insurance on the other hand is beneficial incase of policy holders demise, dependant will receive large chunks of money. One wouldn’t receive fixed returns after the policy tenure in this insurance. For 2CR term insurance premiums will ~30K per year (subject to age at the time of policy). For the same insured amount premiums are much higher on life insurance. Term life insurance does comes with riders to give you the accumulated sum similar to life insurance as well. I strongly advise against it, this increases the premiums and your term insurance ends up becoming life insurance. You should take premium waiver rider and accidental and critical illness riders with term insurance.

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