Right from the beginning of ones life a person is always supported by his/her parents, but there comes a time for each and every human that treads this earth to be concerned about his personal finance, distinctively stated his needs, wants and investments (that can bring him a steady return in the future). As he/she moves forward in his life the dependency slowly shifts from parents to children, and in todays complex world of OPTIONs, one is bound to get lost in all the jargons!! In this post I would like to impart all the knowledge and tricks that I have learnt till today to have a sound financial life and not feel miserable about spending all your money in 2 days!.
So lets begin, and yes I will attach an EXCEL file for all of you to understand my though process and incorporate that in your life, not to mention I have also learned these tricks and tips from someone else so please pardon any resemblances!
In this post lets concentrate specifically on the people who will be graduating recently. How can they manage their monthly budget ?
Take a look at the screenshot of the EXCEL below, I have divided monthly income into 5 different categories namely - 1. Adulting expenses (aka the fixed kind for daily needs) 2. Treat yourself expenses (aka the splurge variety) 3. Loans (aka the money you owe others) 4. Occasional expenses (aka the yearly surprises and shocks) 5. Yearly pocket-pinchers (aka the ones you forget about) And at the end we are left with the money that we can put into the savings account.
Lets say you have an EMI after you are graduating from a premier B-School that charges 20LPA as tuition fees. How to make the payment of loan less burdensome and lighter on your pocket by simple Compound Interest formulas?
And if you are a bit technically sound, basically we will learn how to minimize the interest part (red) of the loan and pay principal(blue) part faster!. Please find below the graph of a loan amortization schedule where the principal part is consistently higher than the interest part:
How to calculate the EMI for any loan, be it Education, Home or Vehicle? How to Manage your Budget?
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