Dear Reader,

Let's talk about finances today.

About a year ago I received my first paycheck, that moment was pure euphoric. But by the month's end, I was broke and started questioning my life choices. 15,000 rupees ($112) might sound like a decent chunk, but trust me, it was a constant battle against impulse buys and growing expenses.

But when I left the internship after 6 months, my expenses were cut down by half with the rest going towards investments which in a year gave me a sweet 60% return (hello, bragging rights!)

So, buckle up and join me on this journey of how I switched from being broke to financially woke as I share my top 3 financial lessons (learned the hard way!) with you.

1. The 50-30-20 rule:

Budgeting is hard I know but this rule will give you a blueprint to build upon it.

It says 50% of your income should go towards your needs (utility bills, rent, health care, food), 30% to wants (Dining out, Travel, that occasional Netflix binge), and 20% toward savings or investments (aka, your future self thanking you).

This will help you achieve a balance between meeting essential needs and planning for the future at the same time.

I use an app called Cashbook (because spreadsheets are old-fashioned) to track my income and expenses. I suggest you give it a try.

2. Focus on beating the inflation

Inflation is like the predator on top of the food chain eating up the value of currency. Don't let it get to you.

Here's how to beat it.

a. Savings:

This is the easiest way to beat inflation provided that the interest rate is greater than the inflation rate.

If the interest rate in the savings account is 7% but the inflation rate is 10% you will still be losing the value by 3%. But that doesn't mean you should ditch it. At least something is better than nothing.

Fixed deposits are cool, but if you need quick access, a high-interest savings account is your BFF.

b. Invest:

This is where things get exciting (and potentially risky, so please do your research!).

• A great starting point will be Investing in Index funds (example: Nifty 50 which is the index fund that tracks India’s top 50 companies listed on the National Stock Exchange (NSE). Similar is true for S&P 500 in the USA).

3. Have an Emergency fund:

Sometimes life can throw curveballs at you and you need a financial helmet (aka. an emergency fund). It helps cover unplanned expenses or financial emergencies, such as job loss, medical expenses, or unplanned travel expenses.

It is recommended to have at least 3 to 6 months of income in an emergency fund which is 45-90k if you are earning 15,000 a month.

It is typically advised to keep the emergency fund in a savings account with a high-interest rate and easy access, separate from the daily bank account.

That’s all for today’s newsletter on finance. I hope you like it. Let me know if you want more money wisdom.

Till then Have a good day ;)

I will see you around.

- Sumit

P.S. Disclaimer: I'm not a financial advisor, just a regular guy who learned some stuff. Always do your research before making any investment decisions.