The going decade has seen an upsurge in the number of women who have started working. Be it monetizing her talents or the just for amusement breaks, she just doesn’t want to settle down the typical way. There is much more to her foray than wrapping up the daily chores and going off the chain behind those hyperactive kids.
Earning for your own self, no matter how miniscule gives a different kind of high. The women that she is, doesn’t want to be wholly dependent on her male counterpart for her and her kids sustainence. For the better off’s, it’s about nurturing their talents and hobbies, and offcourse who won’t welcome the financial influx.
With those earnings, comes the concern of channelzing it the prudent way, without compromising a huge deal on your current enjoyment and standard of living and at the same time insuring a safe future for you and your kids and for any calamities that might chance.
It’s very significant thus to set a rule of thumb ratio for your earnings. The”Three part Lith rule”. No, you won’t come across this one in any statistical theories! It’s just a prudence rule that would make sense enough to balance your today’s, tomorrow’s and urgencies wisely, without falling a prey to any debt trap at any point in time. One part of the earning goes towards managing daily revenue expenditures, the other part towards the capital expenditure and losses, the latter part goes towards long term investments and returns and this one is called the invest and forget segment.
The revenue expenditure portion should comprise 2:4th of your earnings, sufficient enough to include your short term investments, recurring expenses and essentially those enjoyment sprees. Your non recurring expenses shouldn’t burden your daily needs, therefore a part of your earnings, i.e 1:2, should be segregated for meeting the abnormal, non recurring expenses. This diversification should ensure that you wealth enough for the capital expenses you are planning to undertake, be it planning a vacation or buying any electronics, it will help you decide and plan those well in advance without any windfall outflows; this portion infact comprises your real wealth.
The later half should be utilised for insurances and long term investments, thus determining your future wealth and security built up. This reservoir ensures a hassle free planning for those veteran years when the slope of your earning falls with euthopean rapidity and that of the expenses rises at the same speed.
So stop worrying and start living a stressfree life today, tomorrow and for the years to come.
(Writer is a CA)