This is work in progress! Feel free to reach out to me @bharatkalluri for suggestions and feedback.

One of the first things I think people should be taught when they start earning is managing personal finances. There are some fundamentals on how to manage personal finances. Once these are sorted, you can resort to more niche investment instruments if needed.

Understanding the baseline

Answer these questions for yourselves. No need to justify any of these numbers, just be aware.

  • How much are you spending per month on average?
  • If for some reason, the company you have shuts down. What’s your runway?
  • God forbid, if something happens to you. Is your family financially secure? Similarly if there is an accident and someone in the family needs an immediate operation. Do you have the capacity to handle it with composure financially? These answers are extremely important. Please make a note of these either on paper or mentally.


Emergency fund

Keep 2 * (monthly spend) separately in an FD or an account. The idea is not to get returns on this amount. The idea is to just have a safe backup of cash in case something urgent comes up. Do not touch this fund until & unless an absolute emergency comes up. Once its dealt with, immediately work on replenishing the fund. Once the basics are taken care of, work towards making this 6 * (monthly spend) and eventually 12 * (monthly spend).

Health insurance

Make sure your family & yourself is insured. Take as much cover as possible: 15L, 30L or higher if you can. The younger you are, the cheaper the cost of the monthly premium. The idea of top-ups exist, utilize them if possible. An employer usually gives out a health insurance, make sure to check on that & understand details around it too. Also, make sure to cover your dependents (parents / spouse).

Term life insurance

If something unfortunate happens, your dependents should not be worried about financials. Make sure you get a term insurance of 15-20x the family’s total annual expenses. #todo descriptions on insurance can be better

Clear debts or have a plan for clearing debts

Debts come with an interest and the longer the debt, the more it affects your peace of mind. Make sure you have a highly disciplined plan & a clear timeline for clearing debt.

Wealth growth: Level one

Once the basics are covered, now we can discuss how to accumulate left over wealth. Before starting out on this journey, make sure you understand

  • inflation
  • compounding
  • interest calculations (IRPA) #todo attach resources explaining the basic concepts

Grow your income stream

Growing income through financial instruments is a low probability game, the much more high return/high impact game is to grow in your career. Optimize for this for longer term gains.

Mutual funds

The left over income which is unspent, start investing. This is for long term wealth growth. You do not want your money to stay in an instrument which grows less then inflation since its reducing in value. The safest option in mutual funds would be an index fund. There are numerous videos on the internet explaining what these funds are. But basically the growth of the fund is directly proportional to the top 50 or 100 companies of the country. Which means that the growth of wealth is tied up to the growth of the country. Historically index funds have yielded around 12-15% returns.