You’re not alone. Most of us have bills, loans, and responsibilities pulling us in every direction. But here’s the thing—building financial security doesn’t have to be complicated. A few timeless rules can help you save smarter, invest with clarity, and spend without guilt.
Let’s break down 10 simple financial rules that can truly change how you handle money.
Rule of 72 – Double Your Money, The Easy Math
Want to know how long it takes for your money to double? Just divide 72 by your expected annual return.
- Example: At a 12% return, your money doubles in 6 years.
This quick formula helps you set realistic investment goals.
Rule of 70 – See How Inflation Eats Away Value
Inflation silently reduces your purchasing power. Rule of 70 tells you how quickly.
- Example: At 7% annual inflation, your money’s value is cut in half in about 10 years.
It’s a reminder to always factor inflation into savings and investments.
The 4% Withdrawal Rule – Safe Retirement Planning
When you retire, withdrawing more than you should can wipe out your savings. This rule keeps you safe: withdraw only 4% annually.
- Example: A retirement fund of ₹1 crore allows a safe withdrawal of ₹4 lakh per year.
This way, your money lasts through your retirement years.
100 – Age Rule – Smarter Asset Allocation
This is a simple way to balance risk and safety in your investments.
- Formula: 100 – your age = % of equity you should hold.
- Example: If you’re 30, invest 70% in equity and 30% in debt.
It keeps your portfolio aligned with your life stage.
10-5-3 Rule – Realistic Return Expectations
Don’t chase unrealistic promises. This rule tells you what to actually expect:
- Equity → 10% returns
- Debt → 5% returns
- Savings → 3% returns
Knowing this keeps you grounded and helps balance your portfolio.
41% EMI Rule – Keep Debt Under Control
Never let EMIs eat up your paycheck.
- Rule: All EMIs combined shouldn’t exceed 41% of your income.
- Example: With ₹1 lakh monthly income, EMIs should be under ₹41,000.
It keeps debt from overwhelming you.
Debt-to-Income Rule – The Safer Limit
While EMIs are capped at 41%, ideally your total loan payments should be below 30% of your income.
- Example: For ₹1 lakh income, loan repayments should not exceed ₹30,000.
This leaves room for savings and reduces stress.
Life Insurance Rule – Protect Your Family’s Future
Think of insurance as love in financial form. Your dependents deserve security.
- Rule: Coverage should be about 20 times your annual income.
- Example: With ₹10 lakh annual income, aim for ₹2 crore coverage.
- This ensures your family won’t struggle financially in your absence.