Introduction

Rs. 250,000 per month is a significant monthly income in India that can provide a comfortable life. However, managing such a cash flow without losing track of expenses is crucial. For a couple earning this amount, implementing financial habits can make a significant difference in their financial health and peace of mind. In this article, we will explore the strategies employed by a 30-year-old couple who earn nearly Rs. 330,000 per month, including their budgeting and investment strategies.

Financial Habits and Models

Our financial success is not just about earning a substantial income. It's also about how we manage and allocate this money. We have developed several financial habits that have helped us maintain a clear understanding of where our money is going and how we can save more for the future:

Create a Personal Financial Model

Our first step is to create a personal financial model. This model allows us to track our investments, liabilities, assets, and expenses. By keeping a close eye on these areas, we can make informed decisions about reallocating funds. For example, if our model suggests that we are over-invested in gold, we may choose to pause our gold investments until the allocation in our portfolio returns to the desired range.

Divide Income into Equal Buckets

We divide our salaries into ten equal buckets and ensure that each bucket is independent of the others. This means that we do not exceed the amount allocated to each bucket, regardless of the urgency or need. This approach helps us maintain a balanced budget and avoid overspending.

Utilize Credit Cards for Savings

We make use of multiple credit cards to save a small percentage on all our expenses. We believe that every penny counts in the long run, and this practice has helped us save an additional 1 to 1.5% on our overall spending. Some of our credit cards also offer Big Basket Coupons, which means our groceries are free at least three months a year. This is not only cost-effective but also convenient.

Budget Allocation and Management

With a combined monthly income of Rs. 330,000, each bucket is allocated about Rs. 33,000. Here's a detailed breakdown of how we manage and allocate our income:

Mutual Fund SIPs

Bucket 1 is dedicated to Mutual Fund SIPs, which are aimed at long-term investment and growth.

Equity and Dividend Incentive Investments

Bucket 2 is split between ETFs and dividend-yielding stocks, focusing on both short-term and long-term gains.

Gold and US Stocks

Bucket 3 is for gold and US stocks, providing a diversified investment portfolio.

Education Loan for MBA

Bucket 4 is reserved for education loans related to my MBA, which was a significant expense.

Household Expenses

In Bucket 5, we allocate funds for essential household expenses, including a cook, a nanny, maid services, internet, video streaming, fuel, electricity, and miscellaneous costs.

Additional Household Expenses

Bucket 6 covers extra household expenses such as grocery, non-vegetarian food, dinner dates or outings, personal care, and miscellaneous items.

Debt Investments

Bucket 7 and 8 are allocated for debt investments, including PPF, NPS, and fixed deposits, with a focus on higher return investments.

Insurance and Travel

Bucket 9 is dedicated to insurance premiums, a travel fund, and charitable contributions.

Guilt-Free Splurge

Bucket 10 is for discretionary spending. We allocate funds for upgrading our lifestyle, including gadgets, wardrobe updates, and other personal items for our daughter.

Debt and Expenses

Our finances are relatively stable, with no additional liabilities beyond my education loan. Our father's foresight in planning our residence in Bangalore has provided a significant advantage, and our parents' financial stability means we do not need to send them money, which has had a positive impact on our financial health.

Conclusion

We hope these strategies and insights provide value in managing a substantial monthly income. For anyone seeking financial advice in a similar situation, we welcome the opportunity to connect for a personalized finance session. Feel free to reach out if you have any questions or need assistance.