In the current situation, many people have experienced salary cuts or even job loss. During such trying times, an emergency fund can come handy and help you tide over such situations with relative ease. However, you don’t have to wait for an economic rebound to begin saving money. Even if you’re already facing income disruption or financial hardship, you can begin setting aside cash for the future.

Here is a quick guide  on  how to best make your emergency fund work for you.

Why have an emergency fund?

An emergency fund is like the fire extinguisher you keep at home. You hope you’ll never have to use it—but when there’s a need, you’re glad it’s there. 

While you can plan for some foreseeable expenses, an emergency fund can help you manage all unplanned expenses efficiently. The current pandemic is an example of one such unplanned expense. 

Here are a few cases in which you might dip into your emergency savings:

  • Job or income loss
  • Medical emergencies
  • Unexpected home repairs
  • Car maintenance
  • Family emergencies
  • Unanticipated travel (not your yearly leisurely travels)

So, how much emergency fund is needed?

Aim to have enough in a savings account to cover 6 months of expenses. 

Everyone’s situation is different, so you can adjust that number based on your circumstances. Before calculating the amount of the emergency fund you need, it is important to calculate the minimum amount you need to get through the unavoidable monthly expenses. 

This should include house rent, loan installments, utility bills, etc. Ensure that you don’t include avoidable expenses like movies, travel, etc. in this amount. 

However, it is most critical to know where to park your emergency fund as the amount invested should not go down either and must deliver excellent returns. So, you must design it specifically to meet your contingencies.

Where should you invest your emergency fund?

Some of the options available to you are:

  1. Fixed Deposit: It is highly liquid and if you decide to withdraw before maturity, you can have cash deposited to your saving account. Your FD should be linked to your net-banking.
  2. Liquid Mutual Funds - They are considered to be safer than other debt instruments. Many liquid funds allow redemption of up to INR 50,000 or 90% of the invested amount. You can redeem any time. However, you  need to remember that withdrawal may take 1-3 days for funds to be credited in your bank..
  3. Cash at Home - Cash can be your biggest protection against any emergency or any circumstances in which you cannot withdraw money from the bank. You should  have up to 1 month’s expenses as cash for super sudden need!

Considering the fact that each of these investment avenues behaves differently, it might be good to split up your emergency funds among them based on your comfort level. 

Where you should not park your emergency fund?

  1. Equity: Never park your emergency fund in equity as the market is volatile. It would be unfortunate to have to sell an investment at a loss to access your emergency fund.
  2. EPF/PPF/ELSS: The number one rule of your emergency fund cash is that it should be money you can easily access in a pinch. Anything that has a lock-in period does not qualify; money in your Public Provident Fund (PPF), Employee Provident Fund (EPF) or Equity Linked Saving Scheme (ELSS) cannot be part of your emergency fund.
  3. Real Estate: Even if you have crores of money in real estate it is impossible to generate emergency funds out of it due to illiquidity.

Therefore, the emergency fund is a personal insurance policy and not a wealth builder. The money must be easily accessible to you and your immediate family, or it may defeat the purpose if you are elsewhere or hospitalized and cannot access it. Safety and liquidity are the only two parameters that should be taken into account.

Wealth Cafe advice 

Emergency fund is like your parachute that saves you from a freefall in the event of a financial crisis. So, always give it the importance it deserves.

It would be useful to keep reviewing your emergency fund requirements at least once a year, as there may be changes in your life like starting out a business, taking a sabbatical from work, addition of a new family member or a change in your lifestyle.

Check out our course NM101: Maximise your savings - to learn how to manage your money and get started with savings.

You can also enroll to NM 102: Build a Safety Net - to learn more about emergency funds and insurances

What is a recession? What causes recession?

Do you remember the financial crisis of 2007? It caused global economic chaos and an extended period of an economic slowdown. Well, that phase in the global economy was a phase of recession. So what is a recession and what causes it? Let us learn more about it.


Let us first understand, What is recession?

A recession is when the GDP growth rate of a country is negative for two consecutive quarters or more. It  is a significant economic downturn spread across the economy that lasts more than a few quarters.

Although an economy can show signs of weakening months before a recession begins, the process of determining whether a country is in a true recession (or not) often takes time. A recession is short, but its impact can be long-lasting. It is based on key economic indicators like manufacturing data, decline in incomes, employment levels etc.,

So during the period of recession, the economic performance of the entire country stagnates. Businesses across the country will suffer the effects of the recession. The government too will be helpless to an extent. Take for example the global recession of 2007-2008. It started due to the housing market fiasco in the USA, but the global economy suffered and its adverse effects were seen in India as well.

What causes a recession?

There are many theories as to what may cause an economy to go into an economic slowdown. Some factors have been identified that may cause an economic slowdown in a country that ultimately results in a recession. Let us take a look at some such factors.

Economic shocks. An unpredictable event that causes widespread economic disruption, such as a natural disaster or a terrorist attack. The latest example is the recent COVID-19 outbreak.

Loss of consumer confidence. When consumers worry about the state of the economy, they slow their spending and keep whatever money they can. Because close to 70% of GDP depends on consumer spending, the entire economy can drastically slow.

High interest rates. High interest rates makes it expensive for consumers to buy houses, cars and other large purchases. Companies reduce their spending and growth plans because the cost of financing is too high. The economy shrinks. We saw this in 1980 in the USA, when the rates were raised to battle stagflation. But instead, this resulted in a recession.

Deflation. The opposite of inflation, deflation means product and asset prices fall because of a large drop in demand. This encourages the consumer to wait until the prices to reduce further. This can cause a recession in the economy.

Housing Crisis: When the prices of houses fall the owners start losing equity. They can not pay their mortgages or take second mortgages on their homes. This may lead to foreclosure. This was the cause of the Great Recession of 2007.

Falling Wages: When the wages and salaries of workers do not increase with the same level as the inflation in the economy, the purchasing power of the public will reduce. He will not be able to afford the same goods and services that he used to. This can cause an economic slowdown.

Economic Scandals and Frauds: Sometimes banks, large corporations, and even government institutions employ questionable practices and illegal activities to boost profitability. When such schemes and scandals are exposed, the entire economy suffers. Take for example the current financial scandal of Sahara.

Stock Market: In a bear market, investors will pull money out of the stock market. This will drain capital out of the businesses and cause an economic slowdown. Crashes in the stock market are very harmful to the economy.

How Does a Recession Affect Me?

You may lose your job during a recession, as unemployment levels rise. Not only are you more likely to lose your current job, it becomes much harder to find a job replacement since more people are out of work. People who keep their jobs may see cuts to pay and benefits, and struggle to negotiate future pay raises.

Investments in stocks, bonds, real estate and other assets can lose money in a recession, reducing your savings and upsetting your plans for retirement. Even worse, if you can’t pay your bills due to job loss, you may face the prospect of losing your home and other property.

Business owners make fewer sales during a recession, and may even be forced into bankruptcy. The government tries to support businesses during these tough times, like with the PPP during the coronavirus crisis, but it’s hard to keep everyone afloat during a severe downturn.

With more people unable to pay their bills during a recession, lenders tighten standards for mortgages, car loans and other types of financing. You need a better credit score or a larger down payment to qualify for a loan that would be the case during more normal economic times.

Wealth Cafe advice:

Recessions are unavoidable and can be hard to predict. So even in times of healthy economic growth, it is good to be prepared for an economic downturn. Preparing for a rainy day now can save you trouble down the life.  Here are some ways you can prepare your finances for the possibility of a recession:

  1. Make sure you have an emergency fund of at least 6-7 months of your salary 
  2. Live within your means. Spending more than you make is never good.
  3. Limit your existing debt. You should not have an EMI of more than 30% of your income.
  4. Diversify your portfolio and plan an asset allocation based on your risk tolerance. You can use this risk calculator- https://financial.wealthcafe.in/risk-calculator/ 


Check out our course NM101: Maximise your savings - to learn how to manage your money and get started with savings.


Also, please note that we are not indicating or moving towards recession currently. There are many things that are happening around us and the world. We are opening back after COVID 19 lockdowns and there is a supply demand mismatch, but every industry and everyone is working towards making things better. Invest as per your allocation and goals and keep a tab of the overall macro market.

How to do budgeting - different ways in which you can budget

There are many different budgeting methods out there floating around in the ocean of information that we call the internet. Some are simple and some are complicated.

A lot of them don’t work. This makes it hard to find a method that will work for you.

Budgeting methods to consider

Before picking a new or different budgeting method, you might want to figure out where your money is going so that you know what areas need your attention.

Once you have an idea of your spending habits and where you can make changes, five different budgeting methods can help you make it happen.  No single budgeting method is best for everyone, so it’s important to compare each and determine what works best for you.

1. Zero-based budget

The concept of a zero-based budgeting method is simple: Income minus expenses equals zero.

This budgeting method is best for people who have a set income each month or at least can reasonably estimate their monthly income. After calculating your monthly income, add up your monthly spending and savings to equal that income amount.

It’s important to plan out all your expenses as accurately as possible. If you go over one spending category, you’ll need to take cash from another category to make up for it. And if you forget a large expense, it could throw your budget off.

Zero-based budgeting is the most time-consuming method because you have to dig into the details behind each line item.

Since there’s less room for error with a zero-based budget, it might be a better option for someone who has already been budgeting for a while. Even then, it’s a good idea to keep extra cash in your checking account as a buffer. Also, have at least a small emergency fund in case you incur a large unexpected expense.

2. Pay-yourself-first budget

The pay-yourself-first budget is another simple budgeting method that focuses primarily on savings and debt repayment.

Paying yourself first is one of the golden rules by many financial planners. Each month you should remove a fixed % of your income as savings and keep it aside. Now use the remaining amount to spend on your monthly expenses.

So how will you ensure you are paying yourself first?

We do this by having two separate bank accounts.

  1. Income account – in which your salary/fees, basically any earnings, are credited each month.
  2. Investment Account – in which you shall transfer your savings from your salary account. This account will be for all your investments. You will make all your investments, for example, insurance premiums, mutual fund (SIP), deposits, and equity, from this account.

This system of having two bank accounts will ensure that you are saving first – as you MUST transfer a fixed sum of money from your income account to your investment account.

This budget is best for someone who struggles with saving each month or doesn’t want to focus too much on budgeting each expense.

3. Gullak Method of budgeting/ Envelope system budget

This budgeting method is similar to the zero-based budget but with one big difference: You do it all with cash. In an envelope budgeting system, you plan out how you’re going to spend your money each month and use an envelope for each spending category. Then you withdraw as much cash as you need to fill each envelope based on your budget.

As you go grocery shopping, for instance, take your grocery envelope and pay for your items with cash. If you run out, that’s all you can spend in that category for the month unless you want to take cash from other envelopes. Avoid raiding other envelopes too often, though, because it can cause a snowball effect and you can run out of cash before the end of the month.

The biggest proponent of the envelope system, so it’s a great option for people who espouse their beliefs about money, which focus heavily on paying down debt quickly and using cash, not credit cards.

But it’s not a good budgeting method for someone who doesn’t feel comfortable having that much cash on hand or prefers using credit cards or debit cards.

4. 50/30/20 budget

The 50/30/20 budgeting method is straightforward and requires less work than the zero-based and envelope budgets. The idea is to break down your expenses into three categories:

  • Necessary expenses (50%)
  • Discretionary expenses (30%)
  • Savings and debt payments (20%)

This budgeting method is a great option for newbie budgeters because it doesn’t require meticulous tracking of all your expenses. You can succeed with this budget as long as you know what counts as a want versus a need and put enough money toward savings and debt.

The main drawback is that the 50/30/20 rule might be unrealistic for people who have a lot of debt or have big savings goals because 20% isn’t a lot.

But the good news is that you can customize it to fit your needs. For example, you may want to consider increasing the savings and debt repayments category and decreasing the discretionary or necessary expenses categories.

In other words, don’t get stuck on the 50/30/20 proportions. Tailor the concept to your needs.

5. The ‘no’ budget

This “budgeting” method is based solely on your income and expected expenses and moving your money around each month with intention. That’s it.

Before You Start the “No Budget” Method, Do a Quick Assessment of Your Income and Typical Monthly Spending

  • Determine your income
  • Determine the total of your bills each month
  • Estimate how much your other spending costs per month
  • Figure out how many extras there would be for debt/savings/investing each month
  • Use these as a baseline number each month going forward

How to Implement the “No Budget” Method Every Month

Step 1: At the beginning of the month, as soon as you get paid, pay all your bills first.

Step 2: Next, save money or pay off the debt in the amount you’ve determined you can afford each month.

Step 3: Whatever is left over is yours to spend on your variable expenses until you get paid again.

Important: rules for using the “no budget” method

  1. Don’t use credit cards. this ensures you’ll never overspend.
  2. On the last day of the pay period/month, move any extra money in your bank account over to savings or to pay off debt
  3. Keep a buffer amount in the saving account just in case
  4. Check your bank account regularly
  5. Set up automatic investments and your bills
  6. Review spending at the end of the month 

While the “no” budget sounds easier than the other methods we’ve listed, it’s not always easy to tell yourself “no.” This budgeting method is best if you’ve demonstrated spending discipline in the past and are confident that you can continue that streak.

Also, it’s best if you use only a debit card with this budget because it’s tied directly to your bank account and automatically updates your balance.

Wealth Cafe advice:

The important thing is to create your own budgeting rather than trying to conform to someone else’s.

Do that and you will have clarity on how to reach your goals, and you won’t have to worry about being limited in your budget.

You cannot be in complete control of your money if you’re not budgeting in the best way for you.

Budgeting methodGood for…
1. Zero-based budgetTracking consistent income and expenses
2. Pay-yourself-first budgetPrioritizing savings over spendings
3. Gullak Method of budgetingMaking your spending more disciplined
4. 50/30/20 budgetCategorizing “needs” over “wants”
5. The ‘no’ budgetLowering and avoiding unnecessary spends


To conclude, there are different methods of preparing budgets, and there is no best method that fits all. Whatever you do, the important thing is that you develop the habit of managing your money in a way that helps you improve your financial health and achieve your goals.

To learn more about saving and investing enroll in our course: NM 101- Maximise your Savings


Bursting crackers, playing card games, or decorating the house--a lot of customs are associated with the festival of Diwali. And among those typical Diwali rituals, there is one aspect that is generally overlooked – cleaning and decluttering!

Deep cleaning of our houses for Diwali has been an age-old custom. Most families go through similar rituals during this time – they clean every nook and cranny of their houses and yards several days before Diwali arrives. So, why is it so important to deep clean?

Let me tell you,

It helps you to declutter your mind, it just relaxes you the way many 2 therapy sessions would (or not). You just have this dopamine rush of completing some tasks. And also, it's great to be in a house that is dust-free and has more space.

Take stock of everything: It helps you understand what you have and how much. Take a stock of everything you own - clothes, books (I found some great books I got and I haven't read yet, finishing it before the year ends), home decor, candles, and shoes (omg not used them for 2 years now).

Discard all that you don’t need - Simple rule - what you don't use please discard. I am everything but a hoarder and I love my mother for this. If I don't use something, I discard it and then I buy less of things I don't want to use because discarding them is extremely painful. Thus, becoming a smart shopper. I do not decide after shopping, I decide before shopping.

No mindless Diwali/Festive Shopping - Ugh I hate it when people buy things just because it is Diwali. Yes, it was great when you did that only once a year. But now we are shopping literally all the time. We always have Myntra or Amazon tabs open on our phones. Hence just shop what you want or don't shop.

Set budgets - Diwali is all about budgeting guys. Look closely, you will see savings everywhere but Marketing is only showing Spending more.

Now that we have touched on the budgeting topic, let us talk more about finance with the whole deep cleaning idea. This deep cleaning is not just limited to your wardrobes and homes but also can be extended to your portfolio. Take this opportunity to deep clean your Portfolio

Ways to Deep Clean your Portfolio

Collect all the data about all your investments, this is the most time-consuming process if you have not been maintaining it properly. But it is totally worth it, you can also check Mprofit software to maintain your investment information. It is available for free for up to 50 lakhs portfolio value.

Now check your asset allocation - How much you have in debt, equity and gold. If you have money in real estate for investments (not the house you live in) then add that too. Know how much % you have in each of these asset classes.

Rebalance or reallocate your Investments as per your risk profile or ideal AA. If you are a regular reader you must know what is your risk profile and ideal asset allocation, for the new bees - check out this blog - One size does not fit all! and our risk calculator to compute your risk profile. 

Once you know your risk profile, compute your ideal allocation and then compare it with what you already have. Rebalance your portfolio to achieve your ideal allocation. These are some ways to achieve your required asset allocation.

Declutter your Mutual Funds - When we are talking about decluttering, remember that one of the first things to do is to stop hoarding on mutual funds, buying every other mutual fund is going to make your portfolio messy, and having too many things of one type is only making your diversification worst. So ensure that you have 5 to 6 mutual funds and not more than that and have 1 fund in each category. Time to declutter your mind, wardrobe, and portfolio.

Read the following article to understand this in more detail - 

How many mutual funds should you have?

When to exit from a Mutual Fund or a SIP

So remember, let it be cleaning your house or your portfolio, both ways you would be welcoming more Laxmi in your life 🙂

Smart investing: Time to re balance your investment portfolio

Investing isn’t something that’s a one-time exercise. Sure, you need to put a great deal of thought into selecting the investments that make up your portfolio. But once your investment portfolio has been ideally constituted, does that mean your job is done? Surely not. Your investment portfolio needs to be analyzed from time to time to check if it’s still ideally aligned with your risk-return profile

For instance, you invested in a mutual fund. The fund is up 50%. You are pleased and redeem your money. 

Before we discuss if it was a good idea to redeem and exit your mutual fund investment, we have to ask, why did you invest in the fund? Was it for a specific goal? Was it to create long-term wealth? 

If you redeemed because you reached your financial goals, then BRAVO!!!  On the other hand, if you are a long-term investor, then you probably need to rebalance your portfolio on a periodic basis. It is important for two reasons: risk management and improved returns.

As markets fluctuate, rebalancing your investments will require buying or selling some portion of your mutual funds so that your asset allocation is in line with your risk profile.

Why do you need to rebalance?

Rebalancing is probably one of the most overlooked aspects of Investing. 

If pedaling is like injecting savings into your portfolio (by far, the hardest part) and wheels are transforming it into returns then what is rebalancing?

As conditions change, gears help to keep the legs spinning at the pace you want.  The same goes on with rebalancing. Adjusting the gears so that you won’t injure yourself when facing an uphill battle or strong winds.

Over time your strength may not be the same anymore, at which point the gears you use may change more permanently.

Bulls and Bears - when you need to take action!


When should you rebalance your portfolio?

Now that you’ve understood the portfolio rebalancing meaning, it’s time to move on to the next big question – when should portfolio rebalancing be done? Typically, there are different triggers that make portfolio rebalancing necessary.

Here’s a preview of some such scenarios or situations when you need to revisit your portfolio and check if it’s still aligned with your goals.

Market Condition

A standard rule of thumb is to rebalance when an asset allocation changes more than 10%. You can refer to my article- How am I investing in current times 

Changes in your risk profile

When you first constituted your investment portfolio, you may have been an aggressive investor who was open to taking more risks. But with time, your risk profile could have undergone changes. You may have become less tolerant of risks, reducing your risk taking capacity. In such a case, with changes in your risk profile, portfolio rebalancing becomes necessary.

A new financial goal on the horizon

Over time, new financial goals may be added to your objectives. When you start a family, for instance, you will have to make room for additional goals like paying for your child’s college education. When new goals like this are added to your investment objectives, you may need to revisit your portfolio to ensure that it’s capable of meeting these new targets. If it’s not so equipped, portfolio rebalancing can help.

Fast-approaching retirement

When you’re nearing retirement, it becomes increasingly essential to ensure that your investments are properly aligned to meet your retirement goals. Rebalancing your investments may be necessary to help you achieve that target corpus you have in mind. So, if you find yourself just a few years from the big day, check your portfolio and use portfolio rebalancing strategies to adjust the asset allocation, if needed.


Portfolio rebalancing strategies: How to rebalance your portfolio?

Rebalancing your portfolio will depend specifically on your investment needs and goals. However, a few simple steps can help you understand the process better. 

  1. Have a target asset allocation in place. Factor in your life goals, your risk appetite, and your retirement goals to make your asset allocation aligned with your investor profile. 
  2. Constitute your investment portfolio based on your required asset allocation.
  3. Revisit your portfolio every six months or every year to check if the assets therein continue to adhere to the original target allocation.
  4. Also, revisit your asset allocation target periodically to ensure that it is in tune with your life goals.
  5. In case your target allocation is not met, you may have to purchase new units of some assets or sell off existing units of other assets as needed, till the right asset allocation is achieved once more.

Wealth Cafe advice: 

Rebalancing is an important part of managing an investment portfolio and is typically needed just once per year. Through rebalancing, you can keep the risk level of your portfolio consistent and perhaps even enhance your returns. Essentially, rebalancing will help you stick to your investing plan regardless of what the market does and also help you maintain your original asset-allocation strategy. When rebalancing, though, you have to be careful not to trigger excessive taxable income in taxable accounts. 

If you’re unsure about how to rebalance your portfolio, it’s always a good idea to seek the help of a financial advisor. We are SEBI registered investment advisors and can help you make sound investment decisions - you can reach out to us at iplan@wealthcafe.in, in order to help you make a financial plan for yourself.

Advice to to-be married/newlywed couples on money

Starting your new life as newlyweds means blending your worlds, and that includes your finances. Talking about your finances may not be the most romantic topic of conversation, but it is an important one to have. That's why it's crucial to find the best advice for newlyweds that will help you manage your money the best way possible.

Even if you already lived together before getting married, managing your money will change after you become legal partners. These money matters may be awkward to talk about at first, but doing so will improve your communication skills and prevent any money misunderstandings in the future.

Also, working together as a team with your finances will strengthen your relationship and help you achieve your money goals together! 

In order to help you out, we are finally announcing the pre-booking of our course- Honey & Money.

Financial Advice for Newlyweds

Don't let your money matters put a damper on your relationship. Here is some advice to newlyweds to keep their finances in order!

1. Discuss Financial Priorities

Talking about money can be stressful, but it’s important to talk about your financial priorities with your partner.

  • Is saving and investment a major priority for you, or do you prefer to spend money at the moment?
  • How much of your income are you willing to spend on luxuries versus necessities?
  • If you plan to have children, how much do you want to support them financially?
    • Will you pay for child care, or will one of you be a stay-at-home parent?
    • Will you pay for the entirety of their college education?
    • Do you expect your children to support you financially in your old age?

These questions don’t have a “correct” answer. Making sure that you and your partner have similar priorities, or can find a compromise somewhere in the middle, can help avoid financial arguments in the future.

2. Talk about your family financial history

Discussing your family financial history is one of the most critical newly married couple tips you can do. Talking about your family's history with money is a great way to open up the conversation about your marriage finances. 

Revealing how your parents handled money, what you learned from their financial resume, and how they taught you to save or spend can be helpful information for couples.

This can also help you figure out if you've inherited financial insecurities or have any money blocks you need to work past. This way, you can tackle them as a team and work towards financial success!

3. When in Doubt, Spend Less on Your Honeymoon

Keep this in mind as you’re planning your honeymoon. Your memories won’t revolve around where you were cheap – you won’t even remember it at all. It can be memorable even if you stayed way out of the city center in a much less expensive hotel. 

This is a prime opportunity to learn about one of the fundamental rules of personal finance together. Money spent on nonessential stuff that you won’t remember is money wasted. Remember what’s essential is you being with your partner. Don’t burn money on other stuff if you are out of budget. All you’ll do is hurt you and your partner in the future.

4. Don't hide your spending habits

A common issue that causes conflicts in marriage is problems with overspending. Overspending can rack up debt, cause mistrust between partners, and shows a lack of respect within the marriage.

Avoid these relationship issues by consulting your partner before making big purchases and being open and honest about your spending habits.

5. Open A Joint Account But Keep Existing Separate Accounts

Before it is even a question of making decisions about retirement planning in a partnership, couples often face a tense conflict in their relationships much earlier. The conflict regarding the allocation of financial resources comes almost unavoidably to all couples.

We advise that both partners should first keep their existing accounts and also open a joint account to which each partner makes a monthly deposit. This joint account will ensure that all your expenses are running from the common account. We have discussed it in detail in our session 1 of the course - Managing cash flows.

6. Start an emergency fund

You never know what the future holds for you, so it's always best to be prepared. You will never regret starting an emergency fund after marriage. For example: if you lose your job, if you are suddenly expecting a baby, if the roof leaks, the car breaks down, and the list goes on.

The size of the fund would depend on several factors such as your income, lifestyle, and number of dependents, existing debt, and so on. It is advisable to save for 3-4 months at least so that the amount should ideally cover your expenses.

Some of the options available to you are:

  1. Fixed Deposit (should be linked to your net-banking)
  2. Liquid Mutual Funds
  3. Cash at Home - Up to 1 month’s expenses (For super sudden need!)

It would be useful to keep reviewing your emergency fund requirements at least once a year, as there may be changes in your life like starting out a business, taking a sabbatical from work, the addition of a new family member, or a change in your lifestyle.

7. Create financial goals as newlyweds

Some of the best advice for newlyweds is to create financial goals together. Having goals set can help you achieve your big visions in life! It will be much easier to reach your goals if you can work toward them together, and it can help reduce tension if you make sure you don’t have goals that directly contradict one another’s.

  • Do you want to live in a lavish house or a small one?
  • Would you rather rent or own your home?
  • Do you want to retire early or work full careers?

8. Discuss your finances with your spouse regularly 

Your marriage finances should not be swept under the rug. Circumstances are bound to change at various points in your married life. So make it a habit to review your finances on a monthly or bi-monthly basis to ensure you are staying true to your household budget.

This is why it’s so important to have “money dates”. In simple terms, a "money date" is a regularly scheduled conversation between you and your partner where you discuss finances. They’re an opportunity to talk about your day-to-day finances, as well as prepare for any short or long-term financial plans in a fun manner.

While money dates can be enjoyed by couples at all stages of their relationship, we recommend you start as soon as you move in together and begin sharing large expenses together. This allows you to build the habit of talking about money together and makes the conversations easier over time. Best of all, you'll quickly start to feel like you're on the same team, working towards shared goals together.

Getting married is an exciting but potentially stressful time. These newly married couple suggestions can help you budget better, create goals, and most importantly find enjoyable things to do together too. Why not get started by taking our free financial courses together to work towards financial success!

Pre-book to our course- Honey & Money to get  70% discount now - click here.

I am unable to ‘Save’ any money ! Guide me.

A common question people ask is, "Where does all my money go?" Though they mean it as a joke, it's said with a sense of sadness. But the reason they don't know where their money goes isn't that they lost it or forgot the pin number to their bank card. They don't know where their money is going because they don't control the cash flow pattern of their money, their money controls them.

Once a young man named Raj approached us for our advice, as he was facing the same issue - how should he manage his expenses?. Raj is a bachelor living in Pune alone in a rented house away from his hometown, Lucknow. It's his first job so he wanted to enjoy his money but he is also responsible to send some back to his parents however, he just cannot save. Every month he feels, this is it, I am going to save money today but it just never happens. He approached us as he had no surplus of money left at the end of the month and hardly had any savings.

Are you A RAJ !!?

Does this happen to you? Do you feel you are doing everything right but you are still not saving any money at the end of the month? Let us help you with it.

Let's review Raj’s monthly income and expenses and help him find some money to save!

We believe everyone can save a bit if they just push themselves a bit.


Step 1 -Review of his monthly income & expenses - HIS CASH FLOWS

Raj’s Expenses:

Toiletries + Basic monthly expenses5,000
Sending to his family10,000
Food 18,000

Raj’s Income = INR 60,000

Extra Spend/Loss = INR 2,250

Looking at his expenses it was a little difficult to figure out until we had a close look at it. Most of the expenses like Rent, Toiletries + Basic monthly expenses like utility bills & the amount that he uses to send his family were expenses that we couldn't fidget with and were his absolute needs. Further, we noticed that he was spending INR18,000 on food! So we asked him to share more details of the same. Traveling expenses and Miscellaneous expenses were also much more than one would expect someone to spend in Pune on a monthly basis. Therefore, we further explained to him how such expenses were harming his savings.

On a closer look at his expenses, we guided him to look at cheaper alternative options for things he was splurging (provided he was ready to make the shift). We also guide him on how these reduced expenses would increase his savings and when these savings are invested it would grow to be a substantial amount for him.

Wealth Cafe Solution:


So Raj was ordering in every meal (almost) and while it seemed fun and easy, it was making a huge hole in his pocket. So, rather than ordering we advised him to opt for having help to cook at home. Making food at home isn’t free, but it could probably squeeze out savings if, 

  1. you buy your groceries in bulk 
  2. if you are ready for home-cooked ‘good’ and ‘healthy food’
PrincipalNo of meals 

(per day)

Cost per mealDaysTotal cost a month
When you order from outside
How much do you spend23003018,000
When you cook at home/or have help to do that
Help expenses3,500
Grocery spends5,000
once a week you still order130051,500
Monthly Savings8,000

Further, we explained to him how grocery shopping should be done, with the intention of saving money. The key here to save money is by buying groceries in bulk and managing it wisely. I have shown it in detail in the table below by taking an example of rice and wheat flour.

Where I order 1 kg18055
how many times ordered55
The total cost of 5Kg9002751175
Where I order 5 kg directly639269908
Monthly Savings2616267

*Price referred from dmart website.

By buying Rice and Flour in bulk, one could save approx 23% in comparison to buying in small quantities. Raj could follow this with other grocery items as well so as to save his money.

By just shifting your monthly habit of ordering into cooking at home, he can have enough savings to start investments and SIPs. This may seem a very small thing but trust us many people get stuck to order in and this just changes everything in your monthly budget.

Traveling: (7 km)

PrincipalCost per day (both side travel)DaysTotal cost a month
Public transport (train + bus)50251,250
Monthly Savings5,500

By using an alternative, i.e, public transport Raj could save INR5,500 every month. That is INR 66,000 every year. Public transports are everywhere and paid for by our taxes. Which means it’s a bit of a waste if we don’t use them at all, right?


A major proportion of Raj’s miscellaneous expenses consisted of buying cigarettes. It is easy to look at small purchases and say “whatever, it’s only INR 15.” As standalone instances, INR 15 for anything isn’t a lot of money. However, spending INR 15, on a cigarette 5 times a day adds up to a lot of money per year.

In fact, it’s INR 27,000!

PrincipalNo of cigDaysCost per cigTotal cost a month
How much do you spend530152250
Reduce it 1 a day13015450
Monthly Savings1800

If Raj could decrease his cigarette intake from 5 times a day to once a day, it would save INR 1800 a month whereas INR 21,600 a year. I need not tell, as a bonus, it saves his doctor's expense as well in the coming future.

His expense now:





Rent           15,000           15,000
Toiletries + Basic monthly expenses             5,000             5,000
Bills             5,000             5,000
sends family            10,000            10,000
Travelling              6,750                 1250    
Food order (does not cook)            18,000           10,000
Misc               2,500                     700
TOTAL            62,250              46,950

We do not deny the fact that savings are easy but it is not impossible. You can start with savings of INR 2000 each month or look at at least 10% of your monthly income and move forward. By cutting down his expense wisely Raj could save 15,300 (approx 25%) in comparison to before. He is saving INR 13000 monthly (INR 1,56,000 yearly) from his income, whereas he was spending more than his income with no surplus of money before.

Where we always talk about the approach of pay yourself first, where you transfer your fixed savings to a second bank account so even the urge of spending your money does not come in the way of your savings - NM 101: Maximise your Savings


So now that you know what you could be saving. Why not invest it? 

As you see, he has a savings of 13,000 Rs, but by giving him INR 3000 for overheads, he could still invest INR 10,000. When making investment decisions, and investors’ portfolio distribution is influenced by factors such as personal goals, level of risk tolerance, and investment horizon. As Raj was towards balanced investment, his Debt-Equity Mix will be 50% debt and 50% equity. He invested INR 5000 in equity mutual funds which he could keep untouched for long-term goals whereas the other INR 5000 was diversified in liquid/short-term debt funds for emergency and short-term plans.

Did you see how easily the portfolio was diversified? You can learn more about diversification and how to invest in our course - NM 105: Plan & achieve your goals. Once he had a proper hang of investing and could increase his risk tolerance, he could diversify his investments even more after doing proper research. But remember, diversification of assets should be up to a limit. Over diversifying can hurt your investment returns. 



Spoiler: something beautiful happens. He builds more wealth!

Let’s assume Raj makes a 11.50 % average return on investing INR 10,000 (expected equity return =15%, Expected debt return = 8% and based on his ‘balanced’ risk profile)

Five years from now… he would have  ₹8,05,849

Ten years from now… he would have  ₹22,34,032

And in Twenty years… he would have  ₹92,51,011

Don’t wait. Don’t hesitate. Don’t ponder and contemplate. Get started. Chances are good that at least some of the suggestions on this list will work for you and help you spend less money. By reducing your outflow and directing more money to financial goals, you'll be more successful in saving for big things so you can grow your net worth and build real wealth over time. It's worth the effort. 


To learn more about Saving & Investments enroll in our course NM 101: Maximize your savings

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EDLI Scheme 2021: Features & Benefits

The scheme of the name EDLI or Employee Deposit Linked Insurance is not one that many are familiar with. It is a Life Insurance of Rs.2.5 lakh that is built into your EPF Life Insurance of 7 Lakh.

Earlier the maximum ceiling was Rs.6 lakh, Government increased the maximum limit to Rs.7 lakh with effect from 28th April 2021.

Features of EDLI Scheme 2021

  • All employees who are members of EPF are automatically eligible for EDLI.
  • This Life Insurance coverage is irrespective of whether the death occurred during working hours or non-working hours.
  • It covers the death of an employee, irrespective of the cause of death.
  • There are no exclusions under this plan.
  • Coverage and premium will be purely based on your salary but not on age or gender.
  • Earlier there was a condition that one must complete a year to be eligible for EDLI. Recently they removed such restrictions. Hence, you are covered from the first day itself.
  • There is no maximum age set for this insurance.
  • You no need to add nominees separately. Your EPF nomination itself is considered for this scheme.
  • Your Employers can also set up a separate insurance scheme for their employees with approvals from the EPFO if they find that the current coverage is low.
  • You get covered even if you shift jobs and work for another employer covered by the EDLI scheme before you complete one year of service. Earlier, 12 months’ service was applicable under one establishment.

EDLI Scheme 2021 – EPF Life Insurance of Rs. 7 Lakh

Under new changes, now EPF offers Life Insurance of Rs.2.5 lakh to Rs.7 lakh. The employee will not contribute to EDLI. Only your employer will contribute to it. It is 0.5% of Rs.15,000 or Rs.75 per month to the maximum (based on your actual Basic+DA). The maximum amount payable by the employer is Rs.75.

How is Employees’ Deposit-Linked Insurance (EDLI) calculated?

The average monthly salary (Basic+DA) drawn (subject to a maximum of Rs 15,000), during the last 12 months preceding the month in which the employee dies, is first multiplied by 35 times (Earlier it was 30 times). This is added to 50% of the average balance in the account of the deceased in the provident fund during the preceding 12 months or during the period of his membership subject to a ceiling limit of Rs.1.75 lakh (previously it was Rs.1.5 lakh), is also paid to the beneficiary family. 

Note that Rs.15,000 is the ceiling under the EDLI scheme for the purpose of this calculation even if your basic salary exceeds this amount.

The minimum payable will now be Rs 2.5 lakh while the maximum will be Rs 6 lakh.

Let us assume that Mr.A’s salary (Basic+DA) at the time of death is Rs.10,000. Then assume his last 12 months’ average salary was Rs.10,000. Then we have to multiply this by 35. This will be Rs.3,50,000.

Now we have to add 50% of the average balance in the account of Mr.A during the preceding 12 months. Assume his EPF balance for the last 12 months is Rs.1 lakh. Then 50% of this is Rs.50,000. However, the maximum ceiling is Rs.1.75 lakh. Hence, his nominee will receive Rs.50,000 as a bonus but not Rs.1.75 lakh.

So in total, his nominee will receive Rs.3,50,000+Rs.50,000=Rs.4,00,000.

Now let us assume a simple calculation like one’s salary is Rs.15,000, then 35 times of Rs.15,000 is Rs.5,25,000 and the bonus added to the maximum is Rs.1,75,000. Hence, the total maximum benefit under the EDLI is Rs.7,00,000. The benefit will not go beyond this amount.

How to claim the EDLI Benefit?

  • A nominee can claim the amount.
  • In case there is no nomination, then the legal heir can claim the amount.
  • If the nominee or legal heir is a minor, then a guardian of the minor nominee can claim the amount.
  • You have to fill the forms like Form 20 (for EDLI), Form 10D/10C (for claiming the Provident Fund dues and Pension/Withdrawal Benefit as applicable).
  • All details should be in BLOCK LETTERS.
  • Provide bank details (better to attach a cancelled cheque copy for accuracy of bank details).
    Attach the death certificate of a deceased employee.
  • Guardianship certificate (If the claim is on behalf of a minor family member/nominee/legal heir is by other than the natural guardian.)
  • Succession certificate (in case of a claim by the legal heir).
  • In case the members were last employed under an establishment exempted under the EPF Scheme 1952, the employer of such establishment should furnish the PF details of the last 12 months under the Certificate part and also send an attested copy of the Member’s Nomination Form.
  • You have to send such a filled application to the EPFO Commissioner through the employer.
    In case the company closed or they are not cooperating for a claim, then you have to get the claim form to be attested by any one of the following officials-Magistrate, A Gazetted Officer, Post/Sub-Post Master, President of the Village Panchayat, where there is not Union Board, Chairman/Secretary/Member of Municipal/District Local Board, MLA or MP, Member of CBT/Regional Committee EPF, Manager of the Bank in which the Bank Account is maintained or Head of any recognized educational institution.
  • A claim must be settled with 30 days of such submission.
    However, if there is any fault in filling the form or processing, then you will receive the letter from EPFO for the same and that too within 30 days.
  • If EPFO does not settle the claim within 30 days, then EPFO Commissioner will be liable to pay the 12% per annum interest on such claim amount from the date of the set period for claim settlement.

Conclusion: For some, this Rs.2.5 lakh to Rs.7 lakh insurance may be a small amount. However, for many families, in case of the sudden demise of an employee, this amount would help a lot.

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An Education Loan Guide Book

Quality education comes with a hefty price tag. In today’s education arena, competition is stiff and it is often the ones with the heavily lined wallets that beat out the rest. Fearing losing out on a seat in a premier institute because of lack of funds, parents try their best to gather and keep aside as much funds as possible; but despite their best efforts, they may tend to fall short. During this time education loan comes to one's rescue, as it helps to bridge the gap between the shortfall and the needed money.

What is an Education Loan?

The term education loan refers to the sum of money borrowed to finance school or college-related expenses. Repayment of the loan is generally deferred when the students are studying in school and a six-month grace period is provided post-graduation.

Types of Education Loan in India

In India, the types of Education Loan are broadly classified as Undergraduate Education Loan Graduate Education Loan Career Education Loan

1.      Undergraduate Education Loan: It is a loan which can be availed by students who have completed their secondary education and are planning to pursue further courses to enhance their skills for securing a job.

2.      Graduate Education Loan: These loans can be availed by students who are planning to pursue an advanced degree or higher education at colleges. To apply for this loan, students should have completed theirs under graduation courses.

3.      Career Education Loan: As the name suggests, the career education loan can be availed by students who prefer to attend undergraduate career-oriented programmes provided at technical and trading schools and colleges (like ITI) in the country.

How Does An Education Loan Work?

An education loan helps students to cover the expenses incurred for their academic fee and it also covers their non - academic expenses which occur during their tenure as students. The provision of a student loan unlike any other kind of loan comes in with a set of payment terms and the interest will be charged over the initially borrowed money. An education loan is also known as Student Loan. The EMIs for student loans should be paid over monthly installments which allows the applicants to repay the loan amount through step - by - step procedure.

Eligibility for an Education Loan

·         The applicant should be a resident Indian.

·         The applicant should be aged between 16 - 35 years.

·         The applicant should have either secured admission in any of the designated educational institution or a college which is approved by the bank. Most of the government and some of the top private ones are being recognized by the relevant competent government body and are usually included in the list of approved institutions for an education loan.

Please Note: The education loan covers the complete school fees until the completion of the course and is disbursed to the institution directly from the bank (the money will not be handed over to the students). Any kind of boarding and lodging expenses incurred by the students (includes relocation to a different city for studies) should also be included in the education loan.


List of Expenses included in Education Loan

A student loan covers almost all kinds of academic expenses incurred by a student. Almost all the banks in India provide loans that cover both tuition fees as well as other institutional expenses. It is better if students can check beforehand if their chosen bank or the financial institution will cover all the expenses or not to avoid inconvenience at a later point in time.

Academic Expenses Covered in an education loan

·         Registration Fee

·         Tuition Fee

·         Capitation Fee

·         Examination Fee

·         Counselling Fee

·         Laboratory Fee

·         Hostel Fee

·         Library Fee

·         Transportation Fee

·         Food (Mess) Fee

·         Study Visits and Education Tour Fee

Non - Academic Expenses Covered in an education loan

·         Building Fee

·         Student Insurance Refundable Caution Money

·         Transport and Commuting Expenses

·         Laptop

·         2 - wheeler Equipment and Project Expenses Student Welfare Contribution

·         Entrance Exam Fee (GMAT, TOEFL, LSATS, MCAT, GRE, SAT Exam and so on)

·         In-Flight Expenses (abroad studies)


List of Things to Keep in Mind Before Applying for an Education Loan

Opt your Institute Carefully

Most of the Indian banks and financial institutions will have a list of accredited universities list and they usually restrict themselves to lend loans to the universities or colleges which are listed with them. They also have a few blacklisted universities for which applications will be rejected. If in case, your chosen institute is not on the list of the bank's pre-approved universities then it is better to look out for banks or other institutions that will provide education loans based on the reputation of the institute.

Such banks take note of certain factors like rating, job placement facility, infrastructure into consideration before approving education loans. Students who are planning to study in India can apply for universities that are recognized by the government, University Grants Commission (UGC), Institute for Mediation and Conflict Resolution (IMCR), All India Council for Technical Education (AICTE), and so on. Those who are planning to study abroad should look for the university's reputation and standing.

Maximum Amount for Education Loan

For higher education in India, one can secure a loan of up to Rs 75 lakh with a maximum repayment tenure of up to 15 years. If you are looking for abroad education, then the maximum loan amount available for students is Rs 1.5 crore with a maximum 15 years repayment period.

Interest and Processing Cost

The interest rate for education loans in India stands between 8.50% - 15.20%. Some of the banks provide interest rates at discounted rates if you pay interest on time. Few banks even provide a concession for women applicants at a rate of 0.5 percent. One should also check for the processing fee which is refundable at times based on the bank from where you are procuring the loan amount. Some of the lenders fix processing fees between 1% - 2% of the entire loan amount. In the case of public and private banks, the processing fee ranges between Rs 5,000 - Rs 10,000. Please Note: One may have to incur additional charges like administration fees and service charges during the loan application process.

Decide on the Marginal Amount

Marginal amount refers to the amount which one needs to pay and it ranges between 5% - 15% based on several factors such as the rating of the institute, location, subject. Bank usually funds 80% - 90% of the total required amount for education the remaining part has to be pitched in by you (or parents) from your saved funds. Some of the banks and financial institutions even offer to foot the entire cost based on the student's academic background and performance over the years.

Collateral And Co-Applicants

As per the RBI norms, if your loan amount is less than Rs 4 lakh, then you need not pledge any collateral nor you will have to arrange for anyone as a third-party guarantee or as a co-applicant. If your loan amount exceeds Rs 4 lakhs, then you may be asked by your bank to arrange for a co-applicant. Banks will seek collateral if the loan amount exceeds Rs 7.5 lakhs.

Repayment Holiday

In the case of a student loan, banks usually give a moratorium period (time frame wherein you have availed a loan but has not started for repayment) and hence it is better if you can plan and pay interest during this tenure as interest will accumulate on a simple interest basis during this period. If you start paying your equated monthly installments (EMIs) during the moratorium period, then you can prevent the loan amount from becoming bigger.


Each year, millions of college hopefuls flood into Indian banks to get financial support for their college careers. It can seem daunting, with dozens of forms from multiple institutions, but knowing where to start and what to ask can make a world of difference.

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What Should You Do With Your Old Inactive EPF Account?

I have come across many individuals who have changed jobs or quit their jobs and have their EPF account lying dormant. Some are lazy and some just do not know what to do. And others believe that they are earning interest on the balance lying in their EPF account.

EPF currently provides the tax-free 8.5% rate of interest. This is one of the best debt products which is offering such high returns with utmost safety. Hence, many salaried usually not withdraw their EPF and keep it as it is. However, there are certain rules to it. Don’t blindly believe that you can keep your EPF account as long as possible.

Existing Rules of EPF

Any EPFO Account which fails to make contributions for 36 continuous months (3 Yrs) is called an INOPERATIVE Account. In addition to this, if you applied for a withdrawal but due to wrong address, bank details, or some other reasons you fail to claim the amount and laying with EPFO for 36 months (3 Yrs) from the date of it become payable are also classified as INOPERATIVE Accounts.
However, later on, EPFO clarified that interest will be payable on such a non-contributory period for up to the age of 58 years of the member, this 3 years definition turned useless. As per the current rules, EPFO will credit the interest on such non-contributory accounts up to the age of 58 years. After 58 years, the account will be treated as INACTIVE (but not immediately after 3 years non-contributory period).

The retirement age for EPF is 55 years. Hence, EPFO will pay you the interest up to the age of 58 years (Retirement age+3 Yrs).

However, interest earned on such inactive accounts is taxable income for you. If you resign, retire, or get terminated from your job, but do not withdraw your EPF immediately then interest income earned on your EPF balance is taxable during this non-contributory period. The interest income earned during your employment remains tax-exempted though.

How much interest will you earn in an inoperative EPF account?

Unclaimed money from EPF accounts, as well as from small saving schemes, insurance companies, etc. was supposed to be transferred. As per the Senior Citizens Welfare Fund (SCWF) regulations, after an account has been classified as inoperative for ten years, the amount remaining in it is to be transferred to SCWF. If you do not withdraw the EPF account, then it will be moved to the SCWF account, where it will earn the interest rate of SCWF (declared by Govt on annual basis). The recently declared interest rate on Senior Citizen Welfare Fund interest rate for FY 2020-21 is 5.81%.

So if you keep your money in EPF accounts untouched after 10 years, it will only earn 5.81% (as of today). This interest is determined every year by the GOI.

Financial Conclusion: what you should do?

Your account will turn inactive only when you reach the age of 58 years and not withdraw the EPF balance (Earlier it was 3 years from the non-contributory period).
From the date of non-contributory EPF (i.e. the day you stop working and contributing to your EPF account) to the time of withdrawal, you are eligible to earn the interest. However, such interest is taxable.
If you keep your non-contributory EPF accounts for more than 10 years, then EPFO will move your account to SCWF.
Your EPF account will remain with SCWF for the next 25 years and earn the interest rate declared by Government on such SCWF
After the completion of 25 years with SCWF, if you still not withdraw your EPF account, then Government will forfeit the money. To get back the money, you have to knock the court.

Do remember that such a movement to SCWF will not happen automatically. Instead, EPFO will inform you through the contact details you linked to EPF accounts. If you still not respond and not withdraw, then they move to SCWF.

Hence, considering all these rules, it is always best to transfer your old EPF accounts to the existing active EPF account immediately. Otherwise, withdraw the EPF balance immediately after 2 months from the non-contributory period or unemployment.


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