On this Guru Purnima day here are a few commandments of finance..not sure it there will be 10 or more. This is dedicated to all the people from whom I have learnt about money. Could be my parents, sibling, cousins, teachers, students, grocer, taxi driver…..I seriously do not know. So here are the commandments:

1. Spend much less than you earn – try to save/ invest 20-30% of your take home salary. If you think it is difficult, try your best to reach this figure as soon as possible.
2. Keep your housing cost low – remember the rules in the 1980s? Your EMI should be less than 30% of your SINGLE income or 20% of your Joint income.
3. If you live on rent, your rent should be 20% of your net take home salary.
4. Never go shopping without a shopping list, and stick to it.
5. Your mortgage should be less than 3x your CTC. If both of you are working maybe 4x surely not more than 4x. Buy a smaller house if you must, but stick to this number for sure.
6. You may or may not need a car – taking a taxi works fine for me. However, if you must buy, buy a second hand car. Fix a price – say you buy a car for Rs. 6L and use it for 4 years and sell it off for Rs. 2L, it means that car cost you Rs. 1L per year of usage. Buy the car with full OWN CASH…that is the way to keep your costs low.
7. Monitor your Net Worth. Make sure that you are earning at least 7% on your networth – including your house. Tough ask? At least 6%..if not 7 should be your target.
8. If the committment is for a long time, and is a regular payment…think of the TOTAL committment not just the first instalment.
9. If you do not understand, say NO. Total No. Complete No.
10. Pay off the debt – highest interest first, ….and pay off as soon as possible!
11. Budget all big things..and don’t buy if you did not think it was needed at the start of the year.
12. Think of your Rupee earning per day..or per month. See how much you are paying for other services….vis a vis how much you are earning…Will explain this later on…