What is the 15-85 rule?
In today’s times, the story of a common Indian family is almost the same. Salary comes on the first of the month, there is glow on the face, but by the 15th, lines of worry start appearing on the forehead. We often think that if the salary increases a little more, everything will be fine. But the reality is that the salary increases, but with it the expenses start increasing at twice the speed. After all, how does a middle class person get out of this maze and become a millionaire? Chartered Accountant and Financial Educator CA Nitin Kaushik has shown a very accurate and practical way to do this.
Earning is not less, the real problem is in habits.
Often we feel that we are not able to become rich because our income is less. CA Nitin Kaushik considers this thinking to be completely wrong. According to him, financial crisis does not arise from any one big disaster, but from small bad habits of everyday life. As soon as we get promotion or salary increases, the first thing we do is upgrade our lifestyle. A new phone, a big car or EMI taken on credit card – these are the things which gradually drain your pocket. Market fluctuations do not make you as poor as your uncontrolled spending makes you.
What is the 15-85 rule?
Even if you are afraid of the complexities of the stock market or don’t have time for stock research, you can still make huge wealth. For this, Kaushik has given a simple rule of ’15-85′. This rule says that as soon as you get money, immediately set aside 15 percent of it for investment. You can invest it in low cost index funds through SIP. In the remaining 85 percent, you will have to manage your entire household expenses, hobbies and lifestyle. Discipline is the biggest key here.
Competition for show off is the biggest enemy
The biggest hurdle for middle class families is ‘lifestyle inflation’. In simple words, the expenditure incurred to show off to neighbors or relatives. Kaushik explains that people consider the fall of the stock market as the reason for their loss, whereas the real loss is caused by unnecessary subscriptions, frequent upgrading of gadgets and ‘buy now, pay later’ mentality. If you learn to park your increasing income at the right place instead of spending it, then the future can be not only safe but also wonderful.
This is how you will become a millionaire
You don’t need some magical stock tip or shortcut to building wealth. The mathematics is very simple. If you invest in equity for a long period and you get an average return of 12 to 15 percent, then the power of compounding will show its effect. If even a normal working person keeps investing with discipline for 25 to 30 years, he can easily create a fund of Rs 3 crore to Rs 6 crore. Becoming rich is not a game of luck, but adopting the right habits at the right time.
Also read- 8th Pay Commission: New salary will be decided by this one formula, now so much money will come in your pocket!