1. Money is a fixed resource with multiple uses, and opportunity costs can make a big difference.
2. Our savings are net of our total earnings and expenditure, for which our expenses should be well within our income.
3. Through structured spending, we would regularly save enough money to achieve our financial goals in life, while adequately covering risks.
4. Correctly estimating and regulating mandatory “non-discretionary” expenses increases ability to build wealth by allocating a lower percentage of regular income to them.
5. Also, “discretionary” expenses should not creep into them, but it requires a tough decision due to heavy emotional quotient.
6. “Unexpected” expenses can be managed efficiently with adequate life, health and general insurance.
7. To save is to find money to invest for creating future income-generating assets generate a future income, and to insure is to reduce future expenses so we can save.
8. Strategic control of expenses through differentiation is thus critical for financial planning, as they are a function of time (regular / irregular) and option (non-discretionary / discretionary).
9. Regular Non-discretionary expenses (Regular income required)
a) Grocery, consumables
b) Rent, power, household help
c) Phone, internet
d) Conveyance, fuel
e) Education
f) Insurance, loan EMIs
g) Taxation liabilities
10. Irregular Non-discretionary expenses (Contingency fund required)
a) Medical contingencies, doctor, medicines
b) Society functions, obligations
c) Emergency travel
11. Regular Discretionary expenses (Regular savings required)
a) Clothes, footwear, personal care
b) Entertainment
c) Restaurants, fine dining
d) Hobbies, sports, fitness
e) Vacation
12. Irregular Discretionary expenses (Higher savings required)
a) Branded wear
b) High-end gadgets
c) High-end consumer goods
d) Expensive gifts
e) Luxury cars
2. Our savings are net of our total earnings and expenditure, for which our expenses should be well within our income.
3. Through structured spending, we would regularly save enough money to achieve our financial goals in life, while adequately covering risks.
4. Correctly estimating and regulating mandatory “non-discretionary” expenses increases ability to build wealth by allocating a lower percentage of regular income to them.
5. Also, “discretionary” expenses should not creep into them, but it requires a tough decision due to heavy emotional quotient.
6. “Unexpected” expenses can be managed efficiently with adequate life, health and general insurance.
7. To save is to find money to invest for creating future income-generating assets generate a future income, and to insure is to reduce future expenses so we can save.
8. Strategic control of expenses through differentiation is thus critical for financial planning, as they are a function of time (regular / irregular) and option (non-discretionary / discretionary).
9. Regular Non-discretionary expenses (Regular income required)
a) Grocery, consumables
b) Rent, power, household help
c) Phone, internet
d) Conveyance, fuel
e) Education
f) Insurance, loan EMIs
g) Taxation liabilities
10. Irregular Non-discretionary expenses (Contingency fund required)
a) Medical contingencies, doctor, medicines
b) Society functions, obligations
c) Emergency travel
11. Regular Discretionary expenses (Regular savings required)
a) Clothes, footwear, personal care
b) Entertainment
c) Restaurants, fine dining
d) Hobbies, sports, fitness
e) Vacation
12. Irregular Discretionary expenses (Higher savings required)
a) Branded wear
b) High-end gadgets
c) High-end consumer goods
d) Expensive gifts
e) Luxury cars