How To Manage Your Money Like The 1% | personal finance tips | money management #Finance

Hello, my friends! It doesn’t matter how much money you earn, what truly matters is how you manage the money you earn. This is an important lesson I’ve learned from working with many individuals. Whether someone earns Rs. 5,00,000 per annum or Rs. 50,00,000, the strategies used by the

top 1% to grow and protect their wealth can be applied by anyone. In this CashNews.co, I’ll explain the 15-65-20 system, a simple and proven approach that will help you manage money like an expert. For those watching our channel for the first time, a quick introduction, I’m Bhaven, a certified

financial planner. Before starting "theartofwealthbuilding.com", I worked as a banker. So, let’s begin. First, let’s understand the "15% rule." For every rupee you earn, 15% should be reserved. This is where your journey toward long-term financial security begins. There are

two important reasons for this. Number one is Peace of Mind. Imagine a situation where your family faces an urgent medical emergency, your car needs unexpected repairs, or you need to visit the doctor for a check-up. Without a solid emergency fund or accessible cash, you’ll not only worry about

the emergency itself but also about how you’ll pay for these surprise expenses. These unplanned costs could disrupt your entire financial setup. But this disruption won’t happen if you have this 15% reserve. Start by saving this money in an easily accessible place, and ensure that this amount

covers at least one month’s essential expenses. This will be your first line of defence against financial surprises. Remember, these expenses aren’t as high as you might think. Don’t include discretionary expenses like a Netflix subscription. Instead, focus on core expenses such as rent or

mortgage payments, groceries, transportation, and utilities. Over time, aim to grow this core expense fund to increase three to six months of your essential costs. Having this emergency fund will provide you with ultimate peace of mind. If a major issue arises, such as job loss, a health problem,

or any other unexpected crisis, you won’t need to take out a Loan to handle the situation. A three-to-six-month quick solution fund ensures you can focus on tackling the emergency rather than worrying about how to pay for it. The second reason to save 15% is to put your money to

work for you. Make your money work for you. Let’s understand how to achieve this. You don’t need to be a financial expert to achieve great results. In fact, many people might already be following this without even realizing it. Before we dive deeper, let me explain why this approach is so

powerful and how to get started, even if you’re a beginner. Let me tell you a story of two friends, Rocky and Pintu. Rocky, invested Rs. 5,00,000 as a lump sum at the age of 30 into an index fund earning a 12% annual return. He left this investment to grow for 20 years, and by the time he turned

50, that Rs. 5,00,000 had grown to approximately Rs. 49,00,000. Note that Rocky did not add any additional investment during this period. Pintu, on the other hand, waited until he turned 40 to start investing. He invested Rs. 1,00,000 every year for 10 years at the same 12% return. By the time

Pintu also turned 50, his total investment of Rs. 10,00,000 had grown to approximately Rs. 20,00,000, which is impressive but significantly less than Rocky’s Rs. 49,00,000. Pintu invested Rs. 10,00,000 over 10 years, which is double the investment amount of Rs. 5,00,000 made by Rocky. The

difference in their returns is due to the power of time and compound interest. Rocky’s investment had an extra 10 years to grow or compound, and this additional decade made a significant difference. His initial Rs. 5,00,000, due to the "snowball effect", grew to Rs 49,00,000 without

adding any new investment. This is why Einstein referred to compound interest as the "8th wonder of the world". The longer you allow your money to work, the more it multiplies. It is like a high-speed train where returns generate even more returns. Where should you begin? The first step

is to check if you are already contributing to the Employees’ Provident Fund Organisation (EPFO) through your job. If yes, then you have already started your investment journey. EPFO, or the Employer’s Choice Provident Fund. Rocky, who is 30 years old, contributes Rs. 5,000 monthly from

his salary to EPFO. His employer matches this contribution by adding another Rs. 5,000. With an annual 6% increase in contributions due to salary hikes, The interest earned on EPFO is tax-free. The final withdrawal amount is also tax-exempt. You also get the benefit of tax saving under Section 80C.

Currently, EPFO offers an assured return of 8.1%. By the age of 50, after 20 years of contributions, Rocky will have accumulated approximately Rs. 1,06,00,000 in his EPFO account, and this is guaranteed. People often withdraw their EPFO balance when they change jobs. However, it is always advisable

to carry forward the EPFO balance. So that it can greatly benefit you during retirement. It’s an excellent way to supercharge your Savings. Let me explain how Rocky falls into the 30% tax bracket. On his annual EPF contribution of Rs. 60,000, he saves 30% of Rs. 60,000, which

amounts to Rs. 18,000 in Taxes. Plus no tax on the interest earned on this contribution. Plus no tax on the final withdrawal amount. Not only that, the contributions made by Rocky’s employer are also tax-free for him. Why? Because this amount is deducted from his annual CTC (Cost

to Company) before his salary is Credited to his account. Additionally, interest earned on contributions up to Rs. 2.5 lakh annually is completely tax-free. Many of our clients, especially those with high-Income packages, maximize their EPF contributions. They even

instruct their employers to deduct 12% of their basic salary plus DA (Dearness Allowance), which is the maximum allowed by law. If you want to create an "advanced financial plan" with the help of a certified financial planner to understand how you can achieve your personal financial

goals, like Inflation-adjusted retirement planning, buying a car or home, or saving for your children’s higher education, how much amount you need in future, and what action you need to take now? Then you can WhatsApp the number displayed on the screen, visit

"theartofwealthbuilding.com" or check the description box of this CashNews.co for more details. And a basic plan that you can follow yourself. To understand this, continue watching this CashNews.co. So, I’m sure now you’re thinking about following the basic plan and wondering where to

invest. The answer is super simple, by investing in passive funds. These funds track the overall Stock Market, and your money gets diversified into the country’s top companies. This means you are not putting all your eggs in one basket. The fees for these funds are also very low,

which means more money gets invested and starts working for you. Once you set up your emergency funds and maximize your contributions to EPF (Employees’ Provident Fund), you can start investing in these passive funds. You don’t need to check these Investments repeatedly.

Nor do you need to sell them frequently to earn higher returns than the market. Simply set up an investment amount that is automatically deducted from your account every month and invested into these funds. Forget about it and let it grow. Literally, even a lazy person can follow this strategy and

become wealthy. Many successful investors have relied on this very approach. Along with this strategy, having a personal financial plan can give you an added advantage. Because having a financial plan helps you understand your future financial requirements, and it acts like a GPS for your

Finances. Every successful investor has a financial plan, which is why they avoid costly mistakes worth lakhs of rupees and save time as well, avoiding such mistakes. Let’s

talk about the 65% rule. Out of every Rs. 1 you earn, 65 paise should go toward your fundamental expenses like rent or home Loan EMI, groceries, utilities, transportation, or any other costs essential for smoothly running your life. This is a tricky part because these expenses

often spiral out of control. For example, when people get a promotion, suddenly their old house feels inadequate, or they feel the urge to upgrade their car. Many times, what we perceive as progress takes us two steps back. These upgrades come with increased rent, EMI, Insurance,

and maintenance costs, causing expenses to rise alongside Income unless you consciously control them. That’s why setting a disciplined limit for your fundamental expenses is crucial, and this 65% rule helps keep these core expenses in check. Based on my experience of creating

financial plans for numerous clients, I can honestly say that controlling these expenses can be very challenging, especially if you live in an expensive city. According to a survey, most Indians spend the majority of their Income on housing, food, and transportation, particularly

on home Loan EMIs and rent. I strongly recommend tracking your spending to understand where most of your Income is going. Once you identify this, you can optimize costs effectively, such as negotiating rent or reducing transportation expenses. Here, I’m not

suggesting cutting down costs that bring you small joys, but controlling significant and unavoidable expenses will give your budget breathing space. This, in turn, allows you to spend on your wants. And this is where the last 20% of your Income comes in guilt-free enjoyment. This

is where the real fun begins! In the book "Die With Zero", the author Shares a powerful idea that I personally love. Our goal is not to leave the world with a hefty bank balance, but to live a fulfilling life using your money. Interestingly, the world’s top 1%

wealthiest people know this secret, they intentionally budget for guilt-free enjoyment, and you should too! Spending your entire life just working leads to burnout. Numerous studies show that having flexibility in your budget allows you to follow financial plans better and achieve your goals. A

rigid budget is like a strict diet where, after a few months, you get tired and start bingeing on junk food, gaining double the weight. If you think spending money on yourself will stop you from becoming wealthy, that’s incorrect. Over time, frustration will lead to overspending, derailing or

disrupting your financial plan. This is why the 50-65-20 rule recommends allocating 20% of your Income for enjoyment and personal fulfilment. Think of it as investing in yourself so that you can maintain balance in life and stick to your long-term financial plan effectively.

Whether it’s dining at an expensive restaurant with your family, finally buying those costly shoes or bags you’ve been postponing, or spending on a luxurious weekend getaway with friends, this 20% should be spent guilt-free. So, these were my top tips to spend your money like the top 1%. If you

found even a little value in this CashNews.co, please like it and leave a "Thank You" in the comments. This small action helps me too, as it increases the reach of this CashNews.co to more people. You can also click on this box to watch more CashNews.cos uploaded on this channel,

"theartofwealthbuilding." If you learned something new, don’t forget to subscribe to the channel. And if you’ve watched this CashNews.co till the end, thank you so much! See you soon with another informative CashNews.co. God bless you all. Jai Hind!