When it comes to money, some people feel they have less money while others have enough to take care of their expenses. However, we all have some basic needs for which we need at least a certain amount so that we don’t face difficulties in fulfilling those needs and meeting some of our aspirations. However, assessing how much money is enough for you to live in India involves several considerations to ensure a balanced and comfortable lifestyle.
Here’s a step-by-step guide to help understand your financial requirements:
Assess Basic Expenses
First you need to assess your basic expenses. Start by determining your essential living costs. This includes housing (rent or mortgage), utilities, groceries, transportation, healthcare, and insurance. Consider the cost of living in your specific city or region, as it can significantly impact these expenses.
Identify your discretionary expenses, such as entertainment, dining out, hobbies, travel, and other lifestyle choices. These expenses can vary widely based on individual preferences.
Education & Healthcare
If applicable, account for education costs for yourself or your dependents. Also, budget for healthcare expenses, including insurance premiums, regular check-ups, and potential emergencies.
Secure Your Future
Allocate a portion of your income towards savings and investments. Consider your long-term financial goals, such as retirement planning, purchasing property, or funding higher education, and create a savings strategy accordingly.
Inflation and Emergency
Factor in the impact of inflation on your expenses over time. Additionally, create an emergency fund to cover unexpected costs or financial downturns.
Adhil Shetty, CEO, Bankbazaar.com, says, “It is recommended to maintain an emergency fund that covers expenses for 6 to 12 months to handle unforeseen financial hurdles. Many prefer keeping these funds in accessible options like Fixed Deposits (FDs), Recurring Deposits (RDs), or liquid funds. Tailor this fund according to your current and future needs, ensuring it adequately covers your regular expenses in scenarios like job loss, health crises, or other unexpected situations.”
Debt and Liabilities
Evaluate any outstanding debts or financial obligations and incorporate them into your assessment. Prioritise paying off high-interest debts to ensure a healthier financial situation.
Determine your aspirations and goals, both short-term and long-term. These may include aspirations related to career advancement, personal development etc.
Regularly review your financial situation and reassess your needs and goals. Life circumstances change, and periodic adjustments to your financial plan are necessary to stay on track.
What is enough for some may not be enough for others. The definition of ‘enough’ money, in fact, varies from person to person based on their individual circumstances, aspirations, and priorities. You must invest and save your money based on your future requirements and financial needs.