Budget (Personal)

Personal Finance

A personal budget is a plan allocating income to expenses, savings, and investments each month. The foundation of all personal finance. Without a budget, savings happen accidentally; with a budget, they happen intentionally.

In detail

Popular budgeting frameworks for India:n50-30-20 rule: 50% needs (rent, EMI, food, utilities), 30% wants (dining, entertainment, shopping), 20% savings/investmentsnReverse budgeting: invest first (SIP auto-debit on salary day), then live on what remainsnZero-based: every rupee assigned a purpose, income minus all allocations = zeronnIndia-specific challenge: joint family obligations, irregular income (bonus, freelance) -- use average monthly income for budget base.

Formula

Savings rate = (Income - Expenses) / Income x 100nTarget: at least 20% savings rate; FIRE aspirants: 50%+

Real-life example

🇮🇳 India example

Meena earns Rs 80,000/month. Budget: needs Rs 38,000 (48%), wants Rs 18,000 (22%), investments Rs 24,000 (30%). She automates: SIP Rs 15,000 on salary day, PPF Rs 5,000, RD Rs 4,000. Remaining Rs 56,000 for needs and wants. Savings rate: 30%.

Frequently asked questions

What is a realistic savings rate for a salaried person in India? ▼

Entry level (salary Rs 30-50K): 15-20% is good. Mid-level (Rs 80K-1.5L): 25-35% is good. Senior (above Rs 2L): 40%+ is achievable. Higher savings rate = earlier financial independence.