Personal Finance Rules

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Top 9 Personal Finance Rules are as follows:


  1. Rule of 72 (Double Your Money)
  2. Rule of 70 (Inflation)
  3. 4% Withdrawal Rule
  4. 100 Minus Age Rule
  5. 10, 5, 3 Rule
  6. 50-30-20 Rule
  7. 3X Emergency Rule
  8. 40℅ EMI Rule
  9. Life Insurance Rule


Rule of 72


No. of yrs required to double your money at a given rate, You just divide 72 by interest rate

Eg, if you want to know how long it will take to double your money at 8% interest, divide 72 by 8 and get 9 yrs

At 6% rate, it will take 12 yrs

At 9% rate, it will take 8 yrs


Rule of 70


Divide 70 by current inflation rate to know how fast the value of your investment will get reduced to half its present value. 

Inflation rate of 7% will reduce the value of your money to half in 10 years.


4% Rule for Financial Freedom


Corpus Required = 25 times of your estimated Annual Expenses.

Eg- if your annual expense after 50 years of age is 500,000 and you wish to take VRS then corpus with you required is 1.25 cr.

Put 50% of this into fixed income & 50% into equity.

Withdraw 4% every yr, i.e.5 lac.

This rule works for 96% of time in 30 yr period


100 minus your age rule


This rule is used for asset allocation. Subtract your age from 100 to find out, how much of your portfolio should be allocated to equities

Suppose your Age is 30 so (100 - 30 = 70)

Equity : 70%

Debt : 30%

But if your Age is 60 so (100 - 60 = 40)

Equity : 40%

Debt : 60%


10-5-3 Rule


One should have reasonable returns expectations

10℅ Rate of return - Equity / Mutual Funds

5℅ - Debts ( Fixed Deposits or Other Debt instruments) 

3℅ - Savings Account


50-30-20 Rule - about allocation of income to expense


Divide your income into

50℅ - Needs  (Groceries, Rent, EMI, etc)

30℅ - Wants  (Entertainment, Vacations, etc)

20℅ - Savings  (Equity, MFs, Debt, FD, etc)

At least try to save 20℅ of your income.

You can definitely save more


3X Emergency Rule


Always put at least 3 times your monthly income in Emergency funds for emergencies such as Loss of employment, medical emergency, etc. 

3 X Monthly Income

In fact, one can have around 6 X Monthly Income in liquid or near liquid assets to be on a safer side


40℅ EMI Rule


Never go beyond 40℅ of your income into EMIs. 

Say you earn, 50,000 per month. So you should not have EMIs more than 20,000 .

This Rule is generally used by Finance companies to provide loans. You can use it to manage your finances. 


Life Insurance Rule


Always have Sum Assured as 20 times of your Annual Income 

20 X Annual Income

Say you earn 5 Lacs annually, you should at least have 1 crore insurance by following this Rule


These rules are equally useful for young, youth and old. Hope you will find them simple, useful and handy.

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