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Financial Planning Thumb Rule

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  Financial Planning Thumb Rule   These thumb rules are very basic they only provide a general direction and may not necessarily give you the exact picture. These are broad guidelines and you may need to adjust them as per your requirement. The thumb rules for financial planning:   First rule The first rule of personal finance is “Pay yourself first”, i.e., your goals. It means that out of your monthly income save a certain percentage of amount for your goals.   Equity Allocation Many factors determine asset allocation. But the most common rule of thumb is used in the investment says equity percentage in the portfolio should be equal to 100 minus your age. So for a 40year old, 40 percent of your investments are in debt and 60 percent (100-40) in equity.   Emergency Fund An emergency fund is a must for any household. There’s no fixed rule on how much emergency cash one would need. Ideally, 3-6months of household expenses should be one’s emergency fund. Retire