#63 - Ten Personal Finance Rules That Everyone Should Know

<p><strong>Notes:</strong></p> <p>[podcast_subscribe id="111"]</p> <p>In this episode, we discuss ten personal finance rules that everyone should know.</p> <p><strong>1) Rule of 72</strong></p> <p>No. of yrs required to double your money at a given rate, divide 72 by interest rate</p> <p><strong>2) Rule of 70</strong></p> <p>Divide 70 by the current inflation rate to know how fast the value of your investment will get reduced to half its present value.</p> <p><strong>3) 4% Rule for Financial Freedom</strong></p> <p>Corpus Reqd = 25 times of your estimated Annual Expenses</p> <p>CBM Episode on Retiring: <a href="https://coldbrew.money/34-how-much-you-need-to-retire-%f0%9f%a4%94/"><u>https://coldbrew.money/34-how-much-you-need-to-retire-%f0%9f%a4%94/</u></a></p> <p><strong>4) 100 minus your age rule</strong></p> <p>This rule is used for asset allocation. Subtract your age from 100 to find out, how much of your portfolio should be allocated to equities.</p> <p>CBM Episode on automating finances: <a href="https://coldbrew.money/4-automating-your-finances/"><u>https://coldbrew.money/4-automating-your-finances/</u></a></p> <p><strong>5) 10-5-3 Rule</strong></p> <p>One should have reasonable returns expectations post taxes</p> <p>10% Rate of return - Equity/Mutual Funds</p> <p>5%- Debts ( Fixed Deposits or Other Debt instruments)</p> <p>3% - Savings Account</p> <p><strong>6) 50-30-20 Rule - about the allocation of income to expense</strong></p> <p>Divide your income into 50%- Needs, 30%- Wants, 20%- Savings</p> <p>CBM Episode on 50-30-20 Rule: <a href="https://coldbrew.money/3-budgeting/"><u>https://coldbrew.money/3-budgeting/</u></a></p> <p><strong>7) 3X Emergency Rule</strong></p> <p>Always put at least 3 times your monthly income in Emergency funds for emergencies such as loss of employment, medical emergency, etc.</p> <p><strong>8) 40% EMI Rule</strong></p> <p>Never go beyond 40% of your income into EMIs.</p> <p><strong>9) Life Insurance Rule</strong></p> <p>Always have Sum Assured as 20 times of your Annual Income.